tag:blogger.com,1999:blog-5613349802102193582.post7960888367204390234..comments2023-12-22T23:56:04.826+11:00Comments on Houses and Holes: IlliquidDavid Llewellyn-Smithhttp://www.blogger.com/profile/01762856583909059662noreply@blogger.comBlogger3125tag:blogger.com,1999:blog-5613349802102193582.post-54971391091544018042010-12-17T16:57:17.894+11:002010-12-17T16:57:17.894+11:00Interesting post. Agree there is way to little tra...Interesting post. Agree there is way to little transparency. But probably still better in Oz than elsewhere. It is very hard to get a proper fix on situation in EU/US and work out how we compare. How many European banks, say, will be able to meet Basel III requirements? Is this even really relevant anymore?Unknownhttps://www.blogger.com/profile/08997845134046924633noreply@blogger.comtag:blogger.com,1999:blog-5613349802102193582.post-71702567785699931562010-12-17T16:39:19.284+11:002010-12-17T16:39:19.284+11:00David, was just thinking that essentially with thi...David, was just thinking that essentially with this announcement by the RBA and APRA and the government banking reforms re: covered bonds. <br />We have ensured that out safe as houses banks will meet the Basel III liquidity requirements. <br />In Basel III liquidity regime with the Liquidity Coverage Ratio (LCR) that the LCR requires banks to maintain a stock of "high-quality liquid assets" that is sufficient to cover net cash outflows for a 30-day period.<br />What is included as a High Quality Assets? <br />The banks' liquidity pools have to be at least 60% Level 1 assets (cash, central bank reserves, and sovereigns) and no more than 40% Level 2 assets (GSE obligations, and non-financial corporate or covered bonds rated AA- or above)<br />The RBA will also be able to ensure through its lending ‘liquidity’ facility the proposed run-off rates to each above mentioned source of funding (central bank reserves and covered bonds), they will also be able to ensure the funding maturity will not roll over in the 30-day window.<br /><br />Just a thought!Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-5613349802102193582.post-64797419483240042992010-12-17T16:10:02.010+11:002010-12-17T16:10:02.010+11:00David, the illiquid is becoming the liquid with th...David, the illiquid is becoming the liquid with the RBA and APRA SECURED liquidity facility. What will be the price of this new found liquidity? <br />David, how can our banks be prepared to operate under Basel III’s liquidity regime? It is simply preposterous to think that our banks be required to maintain a stock of “high-quality liquid assets” that is sufficient to cover net cash outflows for a 30-day period under a stress scenario. We all know that Australia dose not suffer from stress scenarios. Thank God our regulators and bankers of last resort are here to bring sense to the madness of Basel III. <br /><br />Great post and blog, got to go the cricket is back on.Anonymousnoreply@blogger.com