U.S. banking regulators are proposing that the largest U.S. banks maintain leverage ratios that are notably higher than the Basel III capital adequacy regime requires.

The U.S. Federal Reserve Board, the Federal Deposit Insurance Corporation (FDIC), and the Office of the Comptroller of the Currency (OCC) proposed a rule Tuesday that would impose tougher leverage ratio standards for the largest, most systemically significant U.S. banking organizations.

The proposed rule, which would currently apply to the eight largest, most systemically significant U.S. banks, would require these big firms to maintain a tier 1 capital leverage buffer of at least 5% (above the minimum Basel III requirement of 3%). Additionally, the proposed rule would require insured depository institutions of these large banks to meet a 6% leverage ratio to be considered “well capitalized”.

The requirements would apply to bank holding companies with more than $700 billion in consolidated total assets, or $10 trillion in assets under custody. The Fed says that failing to exceed the 5% ratio at the holding companies would mean these firms face restrictions on discretionary bonus payments and capital distributions.

The agencies are proposing a substantial phase-in period for the requirements, which are slated to take effect on January 1, 2018.

“A strong capital base at the largest, most systemically significant U.S. banking organizations is particularly important because capital shortfalls at these institutions have the potential to result in significant adverse economic consequences and contribute to systemic distress both domestically and internationally,” the Fed notes.

“Higher capital standards for these institutions will place additional private capital at risk before the federal deposit insurance fund and the federal government’s resolution mechanisms would be called upon, and reduce the likelihood of economic disruptions caused by problems at these institutions,” it adds.

The proposals are out for a 60-day public comment period.