At the onset of the financial market crisis in 2007, many banks had adequate capital levels but they still ended up experiencing serious difficulties when it came to liquidity risk management. They had failed to sufficiently accounted for their exposure to liquidity risk. Before the crisis, funding was readily available and cheap. This created the impression that markets were safe and that liquidity for funding purposes would always be plentiful and available. However, the uncertainty that the financial market crisis had created rapidly caused cheap funding that ...
Liquidity Risk
Basel III and liquidity management in banks
The Basel Committee on Banking Supervision has been mentioned often in the media both during and after the financial crisis. This Committee provides a much-needed forum for regulators to meet at regular intervals and discuss cooperation on banking supervisory matters such as the management of capital under the Basel III capital accord. The aim of the committee is to enhance the understanding of key supervisory issues such as liquidity risk and capital management. In so doing, they strive to improve the quality of banking supervision worldwide. It is important for banks ...
Liquidity risk levels upgraded under Basel III
The Basel Committee on Banking Supervision has been mentioned often during and after the financial crisis. This Committee provides a forum for regulators to meet at regular intervals and discuss cooperation on supervisory matters relating to banks. The purpose is to enhance the understanding of supervisory issues such as liquidity risk management and to improve the quality of banking supervision globally. In jurisdictions where bank regulators are party to the Basel process, the banks supervised by these regulators should closely monitor the thinking and policy development. For ...