Federal Reserve's Plan May Unlock $6 Trillion in Balance Sheet Capacity

According to Odaily, Morgan Stanley estimated on Thursday that the Federal Reserve's plan to ease leverage rules could release $185 billion in capital and unlock nearly $6 trillion in balance sheet capacity. On Wednesday, the Federal Reserve unveiled a proposal to revise capital requirements for large global banks concerning relatively low-risk assets, aiming to boost participation in the U.S. Treasury market. The proposal was approved by a 5-2 vote and is one of the first deregulatory measures under the leadership of the Federal Reserve's new Vice Chair for Supervision, Bowman. This proposal seeks to reform the so-called 'enhanced supplementary leverage ratio,' linking the amount of capital banks must allocate directly to their role in the global financial system.