As the global leverage ratio (LR) came fully into effect, central banks and market observers have pointed to increasingly clear signs of regulatory arbitrage at quarter-end for banks in regimes that measure the LR at the end of each quarter instead of requiring the daily averaging demanded in the U.S. and some other nations. Describing this quarter-end behavior as “window-dressing,” Basel seeks to curtail it by a series of additional disclosures. Had the Committee’s 2018 statement that window-dressing is inappropriate succeeded, these disclosures would not have been required. Even Basel acknowledges that it remains to be seen if transparency does the trick.

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