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.
In a nutshell, strong external demand is counter-balancing the negative terms-of-trade effects which I mentioned earlier. Second, Japan’s economy has improved resilience in recent years. In the late 1990s, for example, Japan’s economy accumulated excesses in a variety of forms which made it doubly vulnerable to various shocks.