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Part V Liquidity and Leverage, 21 Liquidity Requirements

From: Gleeson on the International Regulation of Banking (3rd Edition)

Simon Gleeson

From: Oxford Legal Research Library (http://olrl.ouplaw.com). (c) Oxford University Press, 2023. All Rights Reserved.date: 25 May 2024

Regulation of banks — Credit risk — Basel 3 — Liquidity — Basel committee on Banking Supervision

This chapter discusses liquidity requirements under Basel 3. The basis of all liquidity regulation remains the BCBS principles for sound liquidity management, which provide detailed guidance on the risk management of liquidity and are intended to promote better risk management in this area. These are supplemented by the liquidity monitoring tools set out in the BCBS paper Basel III: The Liquidity Coverage Ratio and liquidity risk monitoring tools. There is also a move away from modelling and towards a less flexible, less risk-based architecture which prioritises comparability and even-handedness over accuracy and effectiveness. Moreover, supervisors are mandated to operate a comprehensive programme of liquidity supervision over and above the mechanical requirements.

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