Another important instrument to contain excessive leverage during an upswing is to introduce a “leverage ratio”, in addition to the risk weighted capital ratio, covering both, the on-balance sheet assets and off balance sheet items. This practice is already in vogue in certain jurisdictions.
“The Global Factor in Neutral Policy Rates: Some Implications for Exchange Rates, Monetary Policy, and Policy Coordination,” NBER Working Paper Series 23562. Cambridge, Mass. : National Bureau of Economic Research, June. Döttling, Robin, Germán Gutiérrez, and Thomas Philippon (2017). “Is There an Investment Gap in Advanced Economies? If So, Why?