Global standards for liquidity regulation

Eva Liebmann and Joe Peek

No 15-3, Current Policy Perspectives from Federal Reserve Bank of Boston

Abstract: Liquidity risk has received increased attention recently, especially in light of the 2007 - 2009 financial crisis, when banks' extensive reliance on short-term funding, maturity mismatches between assets and liabilities, and insufficient liquidity buffers made them quite susceptible to liquidity risk. To mitigate such risk, the Basel Committee on Banking Supervision (BCBS) introduced an improved global capital framework and new global liquidity standards for banks in December 2010 in the form of the new Basel Accord (Basel III). This brief offers insights from the crisis experience, identifies the problems that the new liquidity regulation aims to address, and summarizes underlying differences between the United States and Europe that may affect the ability to design and implement consistent global standards.

JEL-codes: F33 G01 G28 (search for similar items in EconPapers)
Pages: 43 pages
Date: 2015-07-01
New Economics Papers: this item is included in nep-acc, nep-ban, nep-cba and nep-rmg
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