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Economic Quarterly

March 6, 2019

Richmond Fed’s Economic Quarterly Examines Changes in U.S. Bank Capital Regulation Over Time

In the latest issue of Economic Quarterly, Richmond Fed economist John Walter traces the history of U.S. bank capital regulation and the changes since the 2007–08 financial crisis. Government-imposed capital requirements date back as far as the mid-1800s, including minimum capital-to-deposit ratios in the early 20th century as well as risk-based capital requirements and the inclusion of off-balance-sheet activities in the 1940s and 1950s. Starting with the first Basel Accords in the 1980s, and continuing through Basel II, Basel III and the financial crisis, bank capital requirements became stronger and more sophisticated. Post-financial crisis, regulatory changes aimed to more effectively control the risk-taking incentives of large banking organizations while also minimizing the regulatory burden of the new requirements on smaller banks.

Despite the broad implementation of Basel III and other post-crisis capital requirements, the issue is still being debated and the current set of requirements are unlikely to be the last word.

This article and others in the latest issue of Economic Quarterly are available on our website.

Also in this issue:

The Economic Quarterly is a free publication containing economic analysis pertinent to Federal Reserve monetary and banking policy. More information is available at (800) 322-0565 or online.


As part of our nation’s central bank, the Richmond Fed is one of 12 regional Reserve Banks working together with the Board of Governors to support a healthy economy and deliver on our mission to foster economic stability and strength. We connect with community and business leaders across the Fifth Federal Reserve District—including the Carolinas, District of Columbia, Maryland, Virginia, and most of West Virginia—to monitor economic conditions, address issues facing our communities, and share this information with monetary and financial policymakers. We also work with banks to ensure they are operating safely and soundly, supply financial institutions with currency that’s fit for distribution, and provide a safe and efficient way to transfer funds through our nation’s payments system.

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