Morgan Stanley Estimates Fed's Easing of Leverage Requirements Will Release $185 Billion in Capital

According to a report by Jinse Finance, Morgan Stanley estimated on Thursday that the Federal Reserve's plan to relax leverage rules could release $185 billion in capital and unlock nearly $6 trillion in balance sheet capacity. On Wednesday, the Federal Reserve announced a proposal to revise capital requirements for large global banks regarding relatively low-risk assets, aiming to boost participation in the U.S. Treasury market. The plan was approved by a 5-2 vote, marking one of the first deregulatory measures likely to be introduced under the leadership of the Fed's new Vice Chair for Supervision, Bowman. The proposal would reform the so-called "enhanced supplementary leverage ratio," directly linking the amount of capital banks must set aside to the role they play in the global financial system.