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BNM/RH/GL 001-07

Prudential Financial Policy Department

Liquidity Framework

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normally be expected to demonstrate the availability of liquidity surplus and reserves that can support such fall in deposits.

    • 5.3.

      Third level liquidity measurement

      • 5.3.1.

        The third level of measurement consists of a series of broad ratios and supplementary information designed to indicate the extent of which a banking institution is dependent on a particular market for its funding sources. The coverage includes:

· · ·

large customer deposits interbank market offshore market

5.3.2. This information will allow the banking institutions to assess its exposure to liquidity risk in the event of disruptions in the relevant markets.

6. Liquefiable assets and formally available credit lines

    • 6.1.

      The maintenance of liquefiable assets and formally available credit lines hold value for a banking institution in coping with unexpected heavy withdrawals. This fact is taken into account under the second level liquidity measurement as explained in paragraph 5.1.5.

    • 6.2.

      Definition of liquefiable assets – T here is no explicit definition as to what constitutes liquefiable assets. Under the previous liquid asset ratio framework, some assets were granted “liquid asset status” for purpose of promoting the primary purchases of the assets rather than for their actual liquidity value. To ensure that the determination of liquefiable assets is on a more consistent and objective manner, a set of “qualifying characteristics” for the recognition of liquefiable assets has been identified under the Liquidity Framework. The qualifying characteristics for liquefiable assets are as follows:

· ·

assets easily convertible in large sums into cash at short notice; low counter-party credit risks;

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