- In general, the US has taken a conservative line
in its proposed liquidity coverage rule to meet Basel III
- But smaller banks may be in a tough position as
they try to meet new requirements; estimates about the
funding shortfall may be greater than expected due to a lack
of information about the these banks’
- Major questions also remain about whether some
banks may need to change their business model to meet
proposed liquidity requirements.
Last Thursday, the US Federal Reserve announced its proposed
rule to meet the
Basel III liquidity requirements. It has prompted concerns
about short-falls in liquidity, as well as how medium-sized
institutions will cope.
The proposed ratio would require certain banks - those with
over $250 billion in assets or significant international
holdings - to maintain 30-days worth of liquid assets.
And one concern for both large and medium-size banks going
forward will be the cost...