Implementation of Basel III extended

MANILA, Philippines - The Basel Committee for Banking Supervision is giving banks a four-year extension to comply with the Basel III rule on minimum holdings of easily sellable assets. In a meeting early this month, the committee made amendments to the liquidity coverage ratio (LCR) as the minimum standard for banks. “Today’s agreement is a clear commitment to ensure that banks hold sufficient liquid assets to prevent central banks becoming the “lender of first resort,” it said in a press statement. The LCR is now an essential component of the Basel III reforms, including a package of amendments to the formulation of the LCR in 2010. The package has four elements: revisions to the definition of high quality liquid assets (HQLA) and net cash outflows; a timetable for phase-in of the standard; a reaffirmation of the usability of the stock of liquid assets in periods of stress, including during the transition period; and an agreement for the Basel Committee to conduct further work on the interaction between the LCR and the provision of central bank facilities.