At the same time, high inflation discourages domestic savings, thus increasing reliance on foreign investors who are more likely to prove risk-sensitive and demand a premium because of inflation volatility. High uncertainty premiums can, in turn, result in misallocation of capital, with small and medium enterprises (SMEs) in particular struggling to access funding. Why has South Africa’s inflation struggled to decline?
Notwithstanding the fact that the SLR portfolio of our banks will be included in computing the leverage ratio, Indian banks will not have a problem in meeting the leverage ratio requirement since the Tier 1 capital of many Indian banks is comfortable (more than 9%) and their derivatives portfolios are also not very large. 2  BIS Review 163/2010  Liquidity 11.