Basel III fixed the LR at 3% of Tier 1 capital which still corresponds to total assets about 33 times Tier 1 (against 50 times equity for some EU banks pre-crisis). There are pressures to exclude repos, sovereign bonds and export credits from the LR.
This weakening of the standard should be avoided as it increases the probability of crises and output losses.18 In his recent book, William Cline (2017)19 estimates optimal LR at 7% to 8% for significant U.S. banks, corresponding to 12% to 14% of risk-weighted capital ratio (RWCR).