In the case of systemicallyimportant banks there is also an extra capital requirement over and above the minimum requirements. How large this supplement is depends on how systemically important the bank is. For global systemically-important banks the extra requirement will begin to apply from next year. For the last 12 months there has also been an agreement in the Basel Committee on the short-term liquidity measure, the LCR. In brief, the LCR means that the banks must have a large enough buffer of high liquid assets to be able to cover their cash outflows during a 30-day long stressed scenario. The aim is to strengthen the banks’ resilience to short-term liquidity stress. The LCR will come into force no later than 1 January 2015, but some countries are already applying it. In Sweden, a stricter version of the LCR has been applied since 2013. Leverage ratio complements the risk-based capital requirement As I mentioned earlier, the Basel Committee has made a lot of progress on the leverage ratio this year. In January the Committee agreed on a common method for calculating the ratio. The leverage ratio can be described as measure of how much of a bank’s assets the bank funds using its own capital. Like the risk-based capital measure, the leverage ratio aims to increase the ability of the banks to cover losses. However, unlike the risk-based capital measure, the leverage ratio does not take differences in risk between a bank’s different assets into account.
The Riksbank is of course always able to lend Swedish kronor, but in my view it is not reasonable that the banks can take liquidity risks on the assumption that the Riksbank will always be at hand if things do not go according to plan. The Riksbank should, potentially, be the lender of last resort, not the lender of first resort. Liquidity regulations in Swedish kronor would also give the banks incentives to extend the maturity of their funding. This is because, all else being equal, a bank that extends the maturity of its funding will reduce its short-term cash outflows and will thus have a higher LCR. We can also view risk-weight floors for mortgages as a complement to the existing regulatory frameworks. The leverage ratio deals to some extent with the problem that the risk weights perhaps do not always reflect the actual risk in the banks’ portfolios, but it does not do so precisely enough. International measures may eventually be proposed, but until then and as  2  6  Financial Stability Report, November 2013. Sveriges Riksbank. BIS central bankers’ speeches  long as household indebtedness constitutes a significant risk we need a sufficiently high riskweight floor for Swedish mortgages. At present, we have a risk-weight floor of 15 per cent in Sweden. As long as household indebtedness increases, there are good reasons for raising this floor to at least 25 per cent.