Private Equity News & Analysis

Fed proposes stricter liquidity rules

The new proposal, considered to be more stringent than Basel III, takes a narrower view on what can be characterised as a high quality liquid asset

By
Sam Sutton
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The new proposal, considered to be more stringent than Basel III, takes a narrower view on what can be characterised as a high quality liquid asset

The Federal Reserve has proposed new liquidity requirements that go beyond those set by Basel III, according to a statement released by the central bank on Thursday.

The proposal sets a standard minimum liquidity coverage ratio for international banking organizations, which the Fed defines as those with “$250 billion or more in total consolidated assets or $10 billion or more in on-balance sheet foreign exposure”, according to a statement. The proposal requires banks to maintain liquidity in an amount equal to or greater than its projected cash outflows minus its projected cash inflows during a short-term stress period. 

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