Leverage latest publications
Nonfinancial business debt has increasingly come to the attention of economists working in the spheres of policy and finance. The main reason is the relatively high ratio of business leverage, and is recognized as a potential source of financial instability.
The paper presents a quasi-historiographical or “narrative” analysis of the most critical developments occurring prior to and through the last nine recessions in light of Minsky’s theory of financial instability.
The net profit of the system in the 1Q'19 was EUR 3.2 Bn. The key factors were weak revenues, cost control, and lower provisions. Deleveraging has continued, although since the end of 2018 there has been a slight upturn in total lending. The NPL ratio continues to fall and profitability has improved compared to 1Q'18.
The global leverage ratio framework is to be finalized in 2016, in order to be implemented in 2018, and will help preventing excessive indebtedness in the banking sector to promote financial stability. Banks will have to consider both risk-sensitive and non-risk-sensitive minimum capital requirements when making decisions
This month we focus on: Basel updates progress in Basel III implementation, Europe's Bank Structural Reform, endorsing macroprudential policies, Capital Markets Union, the first six months of European banking supervision, the new resolution tools and liquidity provision and a Digital Single Market strategy for Europe.
The European Commission has adopted, on October 10, a delegated regulation that amends CRR with regards to the leverage ratio definition. It incorporates the necessary changes to largely align it with Basel revised standards.
A harmonized disclosure of the leverage ratio for international banks in 2015 is closer, as US agencies have issued a final rule aligned with Basel revised definition. Europe is pending a Commission delegated act, expected shortly, that will determine if full alignment with global recommendations is achieved.