The Basel Committee has proposed testing a minimum Tier 1 leverage ratio of 3% (33.33 times) to start with as a Pillar 2 measure which will eventually be made a Pillar 1 requirement. International liquidity framework Despite liquidity being central to the functioning of financial markets in general and banks in particular, liquidity regulation did not receive adequate attention until recently.
Real interest rates in the euro area are expected to decrease, as nominal interest rates will remain low for a long period while inflation is expected to gradually rise back towards 2%. But the issue for over-indebted firms is that long-term real interest rates probably cannot go low enough to make new investment attractive: any profits generated will be absorbed by servicing existing debt.