Market-based Capital Ratio = Market Capitalisation/Risk Weighted Assets  Chart 12: Estimates of implicit subsidy Value of implicit subsidy, £  Notches of ratings uplift 4 3 2 1 0 2010  2011  2012  2013  Quantity of implicit subsidy (RHS)  2014  2015  50 45 40 35 30 25 20 15 10 5 0  2016  Average ratings uplift (LHS)  Sources: Moody’s, Bank of America and Bank calculations. Notes: Includes Barclays, HSBC, LBG and RBS. Calculated by multiplying the spread between indicative bonds at standalone and supported credit ratings by the volume of ratings-sensitive liabilities; end-year data. Published in: http://data.parliament.uk/writtenevidence/committeeevidence.svc/evidencedocument/treasury-committee/capital-andresolution/written/69208.pdf  46  All speeches are available online at www.bankofengland.co.uk/speeches  46  Chart 13: Long-run UK and US leverage ratios Per cent 25 (d)  (c)  United States(a)  20 15 10  United Kingdom(b)  5 0  1880  1900  1920  1940  1960  1980  2000  Sources: United States: Berger, A, Herring, R and Szegö, G (1995), 'The role of capital in financial institutions', Journal of Banking and Finance, Vol 19(3-4), pages 393-430; SNL and Bank calculations.
The majority of advanced countries have not come close to experiencing aggregate credit booms in the post-crisis period. When it comes to assessing the efficacy of these tools, it has largely been a case of ‘learning by doing’. Cerutti et al (2017), Kuttner and Shim (2013), Crowe et al (2013) and Boar et al (2017) provide evidence on the impact of tools using cross-country panel studies. Aikman et al (forthcoming) and Banerjee and Mio (2017) study the UK’s experience with the CCyB and with macroprudential liquidity actions respectively. And He (2013) considers the impact of the HKMA’s use of LTV limits. Overall, however, the evidence base on the transmission of macroprudential tools remains fairly slim. There is also relatively little guidance from the literature on tool strategy, selection and interaction. One exception is work assessing the role of monetary policy in leaning against financial cycles. A paper by the Federal Reserve Board (Ajello et al (2016)) analyses the costs and benefits of using interest rates to lean against vulnerabilities in the financial system. In the baseline calibration of their model, the costs of using monetary policy in this way are large relative to the benefits: the optimal adjustment in interest rates in the face of financial stability risks is in the order of 3 basis points.