US and UK Banks Gain $1.3T in Lending Capacity from Leverage Ratio Deregulation

The post-2008 financial crisis playbook just got a major revision. US regulators have loosened the Enhanced Supplementary Leverage Ratio, a rule designed to keep the biggest banks from overleveraging themselves into oblivion, and the result is an estimated $1.3 trillion in newly unlocked lending capacity for the world’s largest financial institutions.

That figure, estimated by S&P Global, represents the additional funds that banks like JPMorgan Chase, Citibank, Bank of America, and Goldman Sachs can now deploy into the economy.

The ESLR was born out of the wreckage of the 2008 financial crisis. It forced the biggest banks to hold a minimum amount of capital as a buffer against their total exposure, including low-risk assets like US Treasuries and repurchase agreements.

The updated rule, which went live on April 1, 2025, reduces the capital requirements banks must hold against those same low-risk assets. A final version of the measures is set for November 25, 2025. By treating Treasuries and repos as less risky for leverage calculation purposes, the change frees up enormous amounts of capital that was previously locked away.

Banks can now lend more money, buy more government debt, and participate more aggressively in repo markets without bumping up against regulatory ceilings.

Projections suggest the total economic impact could reach approximately $4 trillion when the credit multiplier effects are factored in. Sectors like defense and infrastructure, which depend heavily on credit availability, could see particularly notable tailwinds.

Arthur Hayes, the BitMEX co-founder turned macro commentator, has argued that easing bank capital requirements is functionally equivalent to a form of quantitative easing without the Federal Reserve having to fire up the printing press directly.

The UK angle stems from the interconnected nature of global banking. Major US banks operate extensively in London, and their UK subsidiaries sit within the same regulatory and capital frameworks as their parent companies.

Hayes drew a direct line between the ESLR changes and Bitcoin’s outlook, framing the cryptocurrency as a liquidity-sensitive asset that stands to benefit from any expansion of dollar availability in the system.

The November 2025 finalization date also introduces uncertainty. The April 1 implementation was an interim step. If the final rules differ materially from what’s currently in effect, banks may need to adjust their strategies, and the projected $1.3 trillion figure could shift in either direction.