Morgan Stanley expects that the Federal Reserve (FED) will ease leverage ratio requirements, releasing $185 billion in capital.

On June 27, Morgan Stanley estimated that the Federal Reserve’s plan to ease leverage rules could release $185 billion in capital and unlock nearly $6 trillion in balance sheet capacity. The Federal Reserve previously announced a proposal to revise capital requirements for large global banks concerning relatively low-risk assets to boost participation in the U.S. Treasury market. The Federal Reserve approved the plan with a vote of 5 to 2, marking one of the first deregulatory measures that could be introduced under the leadership of the newly appointed Vice Chair for Supervision, Bowman. The proposal will reform the so-called “enhanced supplemental leverage ratio,” directly linking the amount of capital that banks must hold to their role in the global financial system. (Jin10)