APRA updated the frequently asked questions (FAQs) on liquidity risk standards for authorized deposit-taking institutions. As part of this update, APRA has published new FAQs on minimum liquidity holdings, mortgage warehouse facilities, and calculation of collateral outflows. The FAQs provide further information to assist regulated entities in the interpretation of the prudential standard APS 210, the prudential practice guide APG 210, and the reporting standard ARS 210.0 on liquidity risk management. APRA also published an information paper setting out its decision on the quarterly assessment of the countercyclical capital buffer (CCyB) for authorized deposit-taking institutions.
APRA confirmed that, for the authorized deposit-taking institutions, a CCyB of 0% remains appropriate, based on an assessment of the systemic risk environment in the country. The CCyB is likely to remain at this level until at least the end of 2021. APRA reviews the buffer quarterly and may adjust it if future circumstances warrant this. CCyB has been set at 0% of the risk-weighted assets since it was introduced in 2016. However, APRA has already flagged its intention to introduce a non-zero default level for the CCyB and has outlined a proposal to do this as part of the consultation on making the capital framework for authorized deposit-taking institutions more risk-sensitive, flexible, and transparent. This set of reforms will not come into effect until the beginning of 2023. APRA expects to commence the next stage of its consultation on the authorized deposit-taking institutions' capital in the first half of next year. The revised capital framework of APRA is currently scheduled to come into effect from January 01, 2022.
Keywords: Asia Pacific, Australia, Banking, CCyB, Regulatory Capital, FAQ, Liquidity Risk, Basel, Systemic Risk, Reporting, APRA
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