Overhaul of liquidity risk rules may be on the cards

Pressures are increasing for a major international overhaul of liquidity risk regulation for banks, the latest (January, 2006) edition of Global Risk Regulator newsletter reports in its lead story.

The Basel Committee, which effectively sets standards for banks around the world, agreed at its December meeting to undertake an examination of the wide divergence of regulatory practice in this field.

At the same time, the European Commission in Brussels is facing mounting complaints from the EU’s large cross-border banking groups over the difficulties that the different regimes for liquidity supervision in member states pose for coherent group management of liquidity risk.

Meanwhile, the second lead story reports that a review of the regulatory treatment of EU banks’ large exposures is being launched by the European Commission, in a move that looks certain to result in a major rewrite of the rules for such exposures.

This review, which must be completed by the end of 2007, is dealing with one of the main outstanding issues of the Capital Requirements Directive, the EU law that sets a new risk-based capital standard for all banks and investment firms in the 25-country bloc.

Become a bobsguide member to access the following

1. Unrestricted access to bobsguide
2. Send a proposal request
3. Insights delivered daily to your inbox
4. Career development