The proposal unveiled by the Fed would reform the so-called "enhanced supplementary leverage ratio" so that the amount of capital banks must set aside is directly tied to how large a role each firm plays in the global financial system. The Fed board will consider and vote on the proposal later Wednesday.

The Federal Reserve Board’s decision on Wednesday sent shockwaves through the financial sector, as it voted to advance a proposal that would lower capital requirements for the nation’s largest banks—a move supporters say will strengthen the U.S. Treasury market, but which critics warn could weaken the banking system’s defenses.