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by cm2187 1344 days ago
Capital and liquidity requirements are negotiated by central banks in the basel committee. Then the central bank will add its own home made requirements, and that’s the legislation that gets proposed to parliament. The legislation includes all sort of discretionary buffers that the central bank can freely impose. Central banks are front and centre in banks regulatory requirements.

Withdraw QE = either sell bonds or let them mature, reducing the size of the fed balance sheet. Which drains liquidity from the market (new treasury issuances have to be absorbed by the market).

1 comments

Minimum capital requirements are laws. They are defined in the Dodd-Frank Act in the US for instance.