Regulators announce that global liquidity standards would be less onerous than expected and not be fully enforced until 2019, four years later than expected.
The “liquidity coverage ratio” announced on Sunday marks the first time that global regulators have sought to require individual banks to hold enough cash and easy-to-sell assets to allow them to survive a short-term market crisis. The measure is the second critical plank of the Basel III reform package. Tougher new capital rules began to be phased in this month.
But the final rule approved by the supervisors of the Basel Committee on Banking Supervision is significantly more flexible than the draft version put forward more than two years ago. Banks will be able to count a much wider variety of liquid assets towards their buffers, including some equities and high-quality mortgage-backed securities.