Alea

From the usual suspects:

In order to account for financial market developments as well as lessons learned from the turmoil, the Basel Committee has conducted a fundamental review of its 2000 Sound Practices for Managing Liquidity in Banking Organisations. Guidance has been significantly expanded in a number of key areas.
Guidance for supervisors also has been augmented substantially. The guidance emphasises the importance of supervisors assessing the adequacy of a bank’s liquidity risk management framework and its level of liquidity, and suggests steps that supervisors should take if these are deemed inadequate. The principles also stress the importance of effective cooperation between supervisors and other key stakeholders, such as central banks, especially in times of stress.

This guidance focuses on liquidity risk management at medium and large complex banks, but the sound principles have broad applicability to all types of banks. The implementation of the sound principles by both banks and supervisors should be tailored to the size, nature of business and complexity of a bank’s activities. A bank and its supervisors also should consider the bank’s role in the financial sectors of the jurisdictions in which it operates and the bank’s systemic importance in those financial sectors. The Basel Committee fully expects banks and national supervisors to implement the revised principles promptly and thoroughly and the Committee will actively review progress in implementation.

Principles for Sound Liquidity Risk Management and Supervision

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Posted by jck at 9:10 am EST on October 1st, 2008 |