The use of explicit, numerical minimum leverage ratios as part of the capital regulation of insured depository institutions and bank holding companies (BHCs) and their broker-dealer subsidiaries has a long history in the United States, dating back to 1981, but in recent years the scope of their use has broadened considerably as many large broker-dealers were not subsidiaries of BHCs prior to the financial crisis.17 The U.S. intermediate holding company (IHC) operations of foreign banking organizations including their broker-dealers will also be subject to the leverage ratio requirements starting on January 1, 2018. Finally, reflecting the lessons learned during the financial crisis and recognizing that excessive leverage could be built up from off-balance-sheet exposures, the leverage exposure definition was expanded to include off-balance sheet exposures. This new leverage ratio is called the supplementary leverage ratio and applies to the largest U.S. institutions.18 Balance sheet costs tend to make it more expensive for financial institutions to act as intermediaries in money markets.19 If these costs are economically large in the context of the ultra-low-risk, ultra-low-margin world of money markets, this could operate to reduce dealers’ incentive to make markets and act as financial intermediaries, so long as the leverage ratio is the binding capital requirement relative to the risk-based capital requirement for such firms.20, 21 In calculating the leverage ratio, all assets, including cash held at the central bank, are included. Because of the large outstanding stock of reserves in the system, this might have the effect of making the leverage ratio more binding for some firms.
According to various statistical methods, there has been no clear trend for the real exchange rate since the mid1990s (see Figure 7), which may indicate that the long-term value of the krona is close to the average during this period. 20 The period with large current account surpluses can thus not be associated with any tendency towards a real strengthening of the krona. 20  10  Lagerwall and Nessén, 2009. BIS central bankers’ speeches  Figure 7 Real and nominal exchange rate, TCW index Index, 18 November 1992=100 24  24  22  22  20  20  18  18  16  16  14  14 Sweden - total Sweden -excluding housing  12  12  EU -total EU -excluding housing  10  10 80  82  84  86  88  90  92  94  96  98  00  02  04  06  08  Source: The Riksbank  In this context it is worth noting that Sweden, despite so many years with a large current account surplus, is estimated to have a negative net external position. 21 In other words, the value of Swedish assets abroad is lower than the total value of Swedish liabilities abroad. Last year, Swedish liabilities abroad were 2.5 times greater than GDP. The fact that stocks on both the asset and liability sides are large means that variations in the value of these stocks are important to the development of the external position.