Fed Easing of Leverage Ratio Has Already Improved Treasury Market Liquidity, Bowman Says
Speaking on 1 October 2026, Federal Reserve Vice Chair for Supervision Michelle Bowman said that the relaxation of the enhanced supplementary leverage ratio for the eight largest US banks, which took effect in the first quarter of 2026, has already produced improvements in the functioning of the US Treasury market. The eSLR is designed to act as a backstop to risk based capital requirements for global systemically important banks including Bank of America and Citigroup. Bowman's remarks signal that regulators see tangible early evidence that targeted capital relief can feed through quickly to market liquidity.
Why it matters for finance, banking and treasury
For bank treasury and fixed income teams this is an important data point: easing a single leverage ratio constraint has measurably improved the depth of the world's most important government bond market in a matter of months. It validates the argument that regulatory capital rules and market liquidity are directly connected, which is relevant context as the broader Basel III reproposal and liquidity coverage ratio reforms move toward finalisation. Treasury professionals who manage government bond portfolios or repo books should note that improved dealer capacity to intermediate in Treasuries reduces bid offer spreads and supports collateral mobility, both of which matter for funding desk efficiency.
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