Reuters: Scope for U.S. ‘taper tantrum’ sequel reignites capital debate

Potentially destabilizing disruptions in U.S. Treasuries as the Federal Reserve pares bond buying have rekindled calls for it to change a capital rule which banks say discourages them from supporting the market.

Known as the Supplementary Leverage Ratio (SLR), the rule in question was introduced after the 2007-09 financial crisis as a backstop to reinforce primary capital rules.

Fed chair Jerome Powell told a press briefing last week that the central bank was reviewing the SLR, including as part of a wider Treasury market overhaul it is discussing with other top regulators, but did not comment on the rule change proposal.

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