We provide FedFin’s analysis of a new report from the BIS’s Committee on the Global Financial System (CGFS) in which central banks were asked to assess the impact of the new regulatory framework and its implications for monetary policy. The report – which took over a year to release due to a series of in-depth analyses, case studies, and interviews – is a major piece of work with considerable impact on both regulatory and monetary policy. Although it hedges many of its bets, the report indicates that the leverage rule may be problematic for both the banking system and monetary policy, especially to the extent it becomes a binding constraint.

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