The largest US banks will need an additional US$100 billion to meet new liquidity requirements intended to avert a future financial crisis.
Regulators on Wednesday finalized details of the so-called liquidity coverage ratio which will require banks to hold a certain amount of assets that can be quickly turned into cash in an effort to provide protection in the event of a credit crunch, the Financial Times reported.
Banks subject to the new measures would have to hold a combined US$2.5 trillion in high-quality liquid assets over a 30-day stress period, the newspaper said, adding that the amount is US$100 billion more than they currently have.
The liquidity rule, which is the US version of the Basel III reforms, will apply initially only to the largest US banks. But it might later cover the US holding companies of the largest foreign banks, which have to be established by July 2016 under new Federal Reserve rules, the report said.
Banks will have to fully meet the requirements by Jan. 1, 2017, a more stringent deadline than Basel, which gives banks until January 1, 2019, it said.
“As the financial crisis demonstrated, most of our largest and most systemically important financial institutions did not hold a sufficient amount of high quality liquid assets to independently withstand the stressed market environment,” Fed chairwoman Janet Yellen was quoted as saying.
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