Basel prods US, EU, Japan, among other laggards, to adopt two post-crisis rules

1 November 2018 7:25am
The Basel Committee on Banking Supervision flagged a number of its member jurisdictions — including the US, EU and Japan — for failing to adopt two liquidity and capital standards that are part of its post-crisis regulatory framework.

The 2014 liquidity guidance, called the net stable funding ratio, seeks to prevent banks from relying too heavily on volatile, short-term borrowings. The NSFR limits use of these borrowings to fund assets that aren’t easily converted to cash in a crisis.

The 2013 capital standard sets requirements for banks’ equity investments in funds that participate in shadow banking — including hedge funds, managed funds and investment funds. It applies to investments held in institutions’ banking books rather than their trading books.