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BNM/RH/GL 001-07

Prudential Financial Policy Department

Liquidity Framework

Page 9/28

PART D

COMPLIANCE REQUIREMENTS

7. Standard setting and compliance requirement

7.1.

Unlike the previous liquid asset

ratio

regime, the current liquidity

framework does not Its flexible nature

emphasise on rigid compliance with a particular provides a platform where the liquidity profile

ratio. of a

banking institution can be systematically projected for Bank Negara Malaysia and the banking institution

analysis between concerned. This

enables the Bank arrest in advance

to discuss with the any disturbing trend

banking institution concerned and that may affect the future liquidity

positions institution

of will

the banking institution. The discussion with the banking assist the Bank in determining the appropriate compliance

7.2.

requirement to be observed by the individual Bank Negara Malaysia will look towards the

banking banking

institution. institution’s

ALCO

as

7.3.

the As

body primarily responsible for the a minimum standard, however,

management of liquidity. banking institutions are

required

to

maintain sufficient cash flows to withdrawals. Banking institutions

cope with events of unusually heavy are required to maintain a specified

minimum surplus in the cumulative (“3 days” for investment banks) measured under the second level

net maturity mismatch of the “1 week” and “1 month” liquidity buckets as liquidity measurement enumerated in

7.4.

paragraph 5.1.5. The available cumulative mismatch to should be not less than the compliance Bank.

accommodate requirement as

liquidity shocks agreed with the

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