WASHINGTON (Reuters) -The Federal Reserve unveiled a proposal on Wednesday that would overhaul how much capital large global banks must hold against relatively low-risk assets, as part of a bid to boost participation in U.S. Treasury markets.

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 proposal, if completed, could result in a sizeable reduction in capital for the nation's biggest banks. Depository institution subsidiaries at those banks would see capital requirements fall by an average of 27%, or $213 billion. Global bank holding companies would see a 1.4% capital reduction, or $13 billion.

The move is the first in what is expected to be a sweeping effort by the Fed and other bank regulators to step back several rules established following the 2008 financial crisis, as the Trump administration prioritizes deregulation in a bid to boost economic growth.

Fed policymakers touted the changes as a necessary fix, as the requirement imposed as a backstop following the 2008 financial crisis had gradually grown over the years to occasionally constrain bank activities, particularly thanks to the rapid rise in government debt in recent years. Given the leverage requirements direct banks to set aside capital regardless of risk, some Fed officials worried the requirement disincentivized large banks from facilitating Treasury market trading, particularly during times of stress.

"The proposal will help to build resilience in U.S. Treasury markets, reducing the likelihood of market dysfunction and the need for the Federal Reserve to intervene in a future stress event," said Fed Vice Chair for Supervision Michelle Bowman, in prepared remarks.

Bowman added that the sizeable reductions at the bank level would not allow banks to pay out more to shareholders, as the overarching holding companies at each firm would remain constrained by additional capital requirements. Instead, firms would be able to reallocate capital within their organizations more efficiently, she said.

Fed Chairman Jerome Powell said in a prepared statement it was "prudent" to reconsider the rule, given the increase in safe assets on bank balance sheets over the last decade.

Under the current rule, banks must set aside a flat percentage of capital in reserve against all assets. Under the new approach, similar to one proposed but not completed in 2018, banks instead would have to hold capital that is equal to half of their "GSIB surcharge," which is an additional capital requirement imposed on the nation's largest banks, and set based on their overall footprint in the financial system.

While the proposal is expected to advance, two Fed governors indicated they plan to oppose the proposed changes at the Wednesday meeting. Fed Governors Adriana Kugler and Michael Barr said in separate prepared statements they will vote against the proposal, citing the sizeable decrease in capital requirements and skepticism the changes would meaningfully improve bank activities in Treasury markets.

Barr previously served in Bowman's role as the Fed's top regulatory official under President Joe Biden.