U.S. brings policy on liquidity risk closer in line with Basel guidance

03/19/2010 | Risk.net (subscription required)

Federal banking supervisors in the U.S. have issued a joint policy statement that brings their position on liquidity risk closer to being in line with guidance issued by the Basel Committee on Banking Supervision. The regulators said the statement explains their expectations for effective management of liquidity risk. "Recent events illustrate that liquidity risk management at many financial institutions is in need of improvement," according to the statement. "Deficiencies include insufficient holdings of liquid assets, funding risky or illiquid asset portfolios with potentially volatile short-term liabilities, and a lack of meaningful cashflow projections and liquidity contingency plans."

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