Sweden shall act ahead of the EU and introduce quantitative requirements regarding the banks’ liquidity buffers. The aim is to ensure that large banks and credit institutions hold sufficient liquid assets to be able to manage short periods without access to market funding. This is proposed by Finansinspektionen in a new regulation.
Finansinspektionen proposes quantitative requirements regarding the liquidity buffers held by large banks and credit institutions. To further contribute to a stable and smoothly-functioning financial system Finansinspektionen also wants the levels of the liquidity buffers to be made public.
The requirement for a liquidity coverage ratio means that a bank’s liquid assets must manage outflows over a period of 30 days of market stress. The requirement is based on guidelines from the international Basel Committee on Banking Supervision regarding a Liquidity Coverage Ratio (LCR), which are planned to be introduced within the EU during 2015.
The requirement to hold a liquidity buffer includes rules regarding when the buffer can be used. It is proposed that banks under stress that affects liquidity are not required to meet the liquidity coverage ratio.
The companies affected are those with a balance-sheet total as of 30 September of the previous year that is higher than SEK 100 billion. The proposal applies to financial groups on group-level and is not applied to individual companies that are part of a group. At present, eight companies in Sweden would be covered by this regulation.
The proposal will come into force on 1 January 2013.