The crisis brought home the point that even while individual financial institutions are strong, when each of them act to preserve its own interests, these actions could lead to instability of the system. 10.
An internationally harmonised Leverage Ratio has been introduced as a simple back-stop facility to complement the risk based capital framework in order to contain build-up of excessive leverage in the system and comprises of 3% loss absorbing capital relative to all of a bank’s assets, including off-balance sheet assets without risk weighting.