New liquidity regulations can potentially have a dramatic impact on the global banking industry and on individual institutions. In the time since Basel III regulations were formulated, banks have accelerated their efforts to internally analyze and manage liquidity risk.
Our extensive work in this area has shaped our view that, although regulations are taking a large step in the right direction, improvements can still be made by incorporating additional lessons learned from internal bank analyses.
In our report, Basel III Liquidity Metrics: In Need of Refinement, we outline the areas of improvement that we believe are needed in the Basel III liquidity ratios, why these improvements should be considered, their potential impact, and suggest how banks can take action.