The biggest US banks would be required to hold enough easily sold assets to survive a 30-day credit drought under proposed new Federal Reserve liquidity rules.
The Federal Reserve liquidity coverage ratio proposal, approved unanimously at a meeting in Washington, goes further than the Basel III measure adopted in January and calls for earlier implementation than the EU.
The US plan, most stringent for the biggest banks , is looking at implementation by 2017 – two years ahead of Basel's deadline. "The proposed rule would, for the first time in the United States, put in place a quantitative liquidity requirement that would foster a more resilient and safer financial system," Fed chairman Ben Bernanke said before the vote.
The proposal would require setting aside about $2 trillion (€1.44tn), and the Fed estimates that US banks are currently $200bn (€144bn) short.
The Basel Committee on Banking Supervision in January agreed on a liquidity coverage ratio, meant to ensure banks can survive a 30-day credit squeeze without the kind of government aid that was required after the 2008 crisis.
That standard would allow lenders to go beyond cash and low-risk sovereign debt to an expanded range of assets including some equities and corporate debt, according to the agreement.
The US version would include a limited amount of government-sponsored enterprise debt while excluding private-label mortgage-backed securities.
Irish Independent
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