Basel-ii Framework On Liquidity Standards
Chapter notes, video classes, MCQ practice tests and quick-revision one-liners for Bank Financial Management — CAIIB.
One-liners from this chapter
Free sample — 8 of 66 rapid-fire Q&A cards.
What is the primary objective of the Basel-II framework on liquidity standards?
The primary objective is to ensure that banks maintain adequate liquidity buffers to survive periods of financial stress, promoting resilience of the banking sector to liquidity disruptions.
What is the minimum LCR requirement for Domestic Systemically Important Banks (D-SIBs)?
D-SIBs must maintain LCR of 100% at all times.
What does the Liquidity Coverage Ratio (LCR) measure?
LCR measures a bank's ability to meet short-term liquidity needs over a 30-day stress period by holding sufficient High-Quality Liquid Assets (HQLA) to cover total net cash outflows.
What is the time horizon covered by the Net Stable Funding Ratio (NSFR)?
NSFR covers a one-year time horizon for stable funding.
What is the minimum LCR requirement prescribed under Basel-III liquidity standards?
The minimum LCR requirement is 100%, meaning a bank's stock of HQLA must be at least equal to its total net cash outflows over a 30-day stress scenario.
Which Basel committee document introduced the LCR and NSFR standards?
Basel III: International Framework for Liquidity Risk Measurement introduced them.
What is the Net Stable Funding Ratio (NSFR) designed to address?
NSFR is designed to promote medium and long-term funding stability by requiring banks to fund their activities with sufficiently stable sources of funding over a one-year horizon.
What is the run-off rate for less stable retail deposits under LCR stress scenario?
Less stable retail deposits have a 10% run-off rate under LCR.
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