Search results
Jul 13, 2021 · in the US and Europe, the discussions on how they should be regulated will focus largely on capital. To properly understand the roles of both capital requirements and liquidity requirements in influencing bank liquidity creation in the present-day economy, I also take a closer look at the
The LCR will be a key component of OSFI's supervisory approach to liquidity risk, and will be supplemented by detailed supervisory assessments of other aspects of an institution's liquidity risk management framework in line with the BCBS Sound Principles Footnote 2 and OSFI's Guideline B-6: Liquidity Principles Footnote 3, the NSFR (Chapter 3), and the other liquidity monitoring tools (Chapter ...
liquidity provision and the role of regulations such as those in Basel III. 2. Liquidity Provision in the Financial System In recent decades interbank markets have come to play an increasingly significant role in the funding of banks. Ideally, these markets should ensure an efficient liquidity transfer between surplus and needy banks.
- 86KB
- 30
• The literature on liquidity regulation is still at an early stage • There is no clear analysis of whether liquidity should be thought of as corresponding to short term real assets or to monetary instruments • With capital regulation there is a huge literature but little agreement on the optimal level of requirements, but with
Aug 22, 2024 · For banks and financial institutions, managing this risk is vital and is often regulated by frameworks that enforce liquidity standards to ensure financial stability and protect depositors.
- Will Kenton
Theoretical and empirical work on liquidity requirements is nascent, as is work that tries to combine capital and liquidity requirements. This chapter discusses the past, present, and future of both capital and liquidity regulation, implementation issues, and how they should be regulated.
People also ask
Can liquidity requirements and capital requirements be used to regulate banks?
Who should be concerned about liquidity risk?
What is the difference between capital requirements and liquidity requirements?
What regulatory frameworks are in play for bank liquidity risk management?
Does macroprudential regulation affect liquidity requirements?
Why do banks need liquid assets?
One reason why the 2007–2009 financial crisis was so severe and had a global impact was massive illiquidity in many markets, particularly interbank markets. This combined with an extreme exposure of many financial institutions to liquidity needs meant investors ran on a variety of financial institutions, particularly in wholesale markets.
