Financial Repression Tracker

Rules that steer savings into government debt or hold returns below inflation, country by country.

Steer · Prudential sovereign bias

Zero risk weights for sovereign exposures

What it is
Bank capital rules assign a 0% credit-risk weight to claims on the home (or OECD) central government, so holding government bonds consumes no risk-based capital.
Why it counts
Makes government debt the cheapest asset for banks to hold in capital terms, tilting bank balance sheets toward the sovereign and lowering its funding cost.

When it was in force

  • International: 1988 → 1998, historical; its end is not documented
  • European Union: 2014 → now, in force
  • United States: 2013 → now, in force; the rule may be older than the cited document

3 examples

  1. International

    1988 → 1998Historical

    Its end is not documented · As cited: from July 1988 (text as amended to April 1998)

    Basel I set a zero weight for claims on OECD central governments (and on others' central governments in national currency).

    Basel Committee, International Convergence of Capital Measurement and Capital Standards (Basel I), July 1988 (updated to April 1998), para. 36Primary source
    “This decision has the following consequences for the weighting structure. Claims on central governments within the OECD will attract a zero weight”

    bis.org (opens in a new tab)Checked: quote matched on the page by script

  2. European Union

    2014 → nowIn force

    Exposures to EU Member States' central governments in their domestic currency carry a 0% risk weight regardless of rating.

    Regulation (EU) No 575/2013 (Capital Requirements Regulation), Article 114(4)Primary source
    “Exposures to Member States' central governments, and central banks denominated and funded in the domestic currency of that central government and central bank shall be assigned a risk weight of 0 %.”

    eur-lex.europa.eu (opens in a new tab)Checked: quote confirmed on the page by a reviewing agent

    European Union today: index 44.0

  3. United States

    2013 → nowIn force

    The rule may be older than the cited document

    US banks must assign a zero percent risk weight to exposures to the US government and its agencies.

    12 CFR 217.32(a)(1) (Federal Reserve Regulation Q, standardized approach)Secondary source
    “a Board-regulated institution must assign a zero percent risk weight to: (A) An exposure to the U.S. government, its central bank, or a U.S. government agency”

    law.cornell.edu (opens in a new tab)Checked: quote matched on the page by script

    United States today: index 42.9

Examples and their dates reviewed .

Further reading