|
|
The FSA published feedback to its Discussion Paper on liquidity requirements for banks and building societies. Most respondents agreed that one single quantitative regime should replace the existing three although there was some scepticism about the usefulness of quantitative requirements to safeguard against long-term chronic liquidity stresses and about the possibility of standardisation across institutions.
Further key points that emerged from the responses were:
- There was strong agreement on the need to continue coordinating the FSA’s work on liquidity both at a national level and on an international level;
- Most respondents are reviewing their stress testing scenarios and contingency funding plans in line with lessons learned over the past year;
- The majority of respondents stressed the importance of the close relationship between the central bank’s role, actions and provisions, and firms’ internal liquidity risk management processes, as well as any measures developed by the FSA under a new regulatory regime; and
The FSA will consult further on all aspects of the new regime later this year including setting out proposals on sound practices for managing liquidity risk with a strong focus on stress-testing.