Follow Us

Follow us on Twitter  Follow us on LinkedIn
 

17 June 2008

CEBS consults on liquidity risk management - second part


The consultation paper sets out CEBS’s preliminary recommendations regarding the management of liquidity risk by credit institutions and investment firms and the supervision of liquidity risk by EEA prudential authorities.

The consultation paper sets out CEBS’s preliminary recommendations regarding the management of liquidity risk by credit institutions and investment firms and the supervision of liquidity risk by EEA prudential authorities.

 

 

 

The Board of Directors should approve a liquidity risk strategy and risk tolerance appropriate to the institution’s funding profile and the sophistication of its liquidity risk management, taking into account all liquidity risks, including intra-day and contingent risks, as well as potential constraints on cross-border and intra-group flows. Appropriate responsibilities and incentives should be set by senior management through an internal cost/benefit transfer mechanism.

 

CEBS’ recommendations to supervisors call for a proportionate approach, allowing for recognition of internal methodologies on a case-by-case basis based on a thorough prior supervisory assessment, while acknowledging the benefits of a more standardized approach for institutions with a simpler liquidity risk profile.

CEBS is to deliver its final advice by September 2008.

A public hearing will be held on 4 July 2008 at CEBS’ premises in London.

 

Deadline for consultation is 1 August 2008, in parallel with the BCBS consultation.

 

 

Press release

Consultation paper

 


CEBS calls for credit institutions and investment firms to have adequate liquidity risk management for both normal and stressed times, including liquidity buffers, robust stress tests, and regularly tested contingency funding plans.



© CEBS - Committee of European Banking Supervisors

Documents associated with this article

CEBS 2nd part of consultation on Liquidity.pdf


< Next Previous >
Key
 Hover over the blue highlighted text to view the acronym meaning
Hover over these icons for more information



Add new comment