Operating exclusively on a simple non-risk-based ratio may counteract one of the Basel framework’s overarching principles: more risk-taking means higher capital requirements. Having said this, I fully agree to the leverage ratio’s overall intention which is to deliver a simple, transparent and credible ratio, complementing the risk-based capital requirements – and not replacing them. It should just serve as a backstop.
There is no alternative to implementing Basel III on a global scale. In particular, I call on my colleagues in the US not to unexpectedly question the whole framework in the 11th hour – after taking part in its negotiation during the entire process.