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UK Regulator Rejects Easing Bank Capital Rules on Sovereign Debt
UK Regulator Rejects Easing Bank Capital Rules on Sovereign Debt
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BTCCSquare news:
The UK's top banking supervisor has dismissed calls to relax capital requirements for banks holding sovereign debt, warning such a move WOULD ignore critical lessons from the 2023 banking collapses. Bank of England Deputy Governor Sam Woods compared the proposal to "ripping off our jacket, warm hat and gloves and throwing them all over the nearest cliff" during his Mansion House address.
The debate centers on whether to exclude £150 billion in gilt holdings and foreign government bonds from leverage ratio calculations. While lobbyists argue this could free up £5 billion in capital, regulators point to Silicon Valley Bank's collapse as evidence that even sound government bonds carry significant interest rate risks when liquidated at scale.
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