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Mike Norman Economics

Reserve flows under debt ceiling

TGA down at 450b area now … So let’s assume they keep screwing around and eventually bottom it out at 50b leaving the current threat at 400b reserves in TGA that could be forced upon the banking system … To cover that 400b, banks would need at least 1/10th of that in capital for SLR of 0.1 … (might be a bit less) but we’ll be conservative … 1/10th is 40b… so eg if banks were given 40b of additional free capital right now,  then they could cover those additional 400b reserve assets without...

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