A major issue during the crisis was banks being unable to roll over short-term financing. Investor confidence plummeted, leading to a liquidity squeeze within some financial institutions. In response the Basel Committee on Banking Supervision (Basel Committee) introduced two new liquidity ratios for banks. The Basel Committee aims to strengthen banks against adverse shocks; eliminate structural mismatches; and encourage more stable sources of funding.
This report explores the challenges for global banks arising from the new liquidity ratios. It looks at:
The report also contains an illustrative example of how a bank is impacted by the new liquidity requirements.
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