Few measures of the scale of the financial crisis have been as overlooked as the humble leverage ratio. However, as other metrics chosen by financial regulators have proved inadequate measures of banks’ soundness, the leverage ratio is making a comeback.

The change is happening because some market participants have questioned European regulators' reliance on Tier 1 capital ratios as the standard means of assessing financial strength. They believe the metric masked problems at some banks, which could have been uncovered by a closer look at leverage levels. Swiss and US regulators have been among the first to increase their focus on leverage.