The US is pushing forward with banking deregulation. Following an in-depth review of capital requirements, the authorities have now prioritised easing liquidity rules, in a move aimed at restoring the Fed’s role as lender of last resort and potentially enabling it to shrink its balance sheet. Yet one key lesson from the March 2023 banking turmoil could potentially be overlooked: the need to expand the scope of liquidity regulations, which currently apply to far fewer institutions in the US than in Europe.
