The Basel Committee on Banking Supervision has issued a consultative document entitled ‘Monitoring Indicators for Intraday Liquidity Management’ and invited comments by Friday 14 September 2012.
The Committee defines ‘intraday liquidity’ as funds that are accessible during the business day, usually to enable financial institutions to make payments in real time. It says that the proposed indicators will allow banking supervisors to monitor a bank’s intraday liquidity risk management and its ability to promptly meet payment and settlement obligations, both in normal times and in stressed scenarios. Over time, the indicators will also help supervisors gain a better understanding of banks’ payment and settlement behaviour and their management of intraday liquidity risk.
A proposed monitoring framework is set out in the consultative paper and includes:
- The detailed design of the monitoring indicators for a bank’s intraday liquidity risk.
- Stress scenarios.
- Key application issues.
- The reporting regime.
The Committee says that use of the proposed indicators will complicate the guidance in intraday liquidity risk management set out in its 2008 publication ‘Principles for Sound Liquidity Risk Management and Supervision’.
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