TLAC proposals threaten liquidity

摘要

Banks are set for a fight with the Federal Reserve over proposed regulations that could make it harder for them to trade unsecured bank debt. The proposals require banks to issue at least US$120bn of loss-absorbing capital to meet new global standards from 2019, but could also constrain liquidity in those instruments. The Fed's proposed interpretation of the Financial Stability Board's Total Loss Absorbing Capacity rules imposes capital deductions on banks that invest in holding company debt of the eight largest US banks - even if the debt is their own.