The Federal Reserve Board has announced the 2024 global indicator amounts used to determine risk-based capital surcharges for bank holding companies considered globally significant. These surcharges are calculated using a formula that considers various factors like size and interconnectedness. The Board uses data collected by the Basel Committee on Banking Supervision and converts these figures from euros to U.S. dollars for their calculations. The notice provides a methodology for identifying such banks based on their potential impact on the financial system.
Simple Explanation
The Federal Reserve is talking about how they figure out extra money big banks have to keep aside to stay safe, like having a piggy bank for rainy days. They look at a lot of numbers, like the bank's size, and use tricky math to decide who needs a bigger piggy bank, even if this seems a bit confusing.