APRA announced the updated aggregate amounts for the 2021 Committed Liquidity Facility (CLF) established between the Reserve Bank of Australia (RBA) and certain locally incorporated authorized deposit-taking institutions that are subject to the Liquidity Coverage Ratio (LCR). After including the reductions that became effective on or before February 01, 2021, the total CLF amount allocated for 2021 is approximately AUD 139 billion. Authorized deposit-taking institutions have reduced their CLF allocations owing to the material improvements in funding and liquidity of authorized deposit-taking institutions as well as the substantial increases in government securities.
APRA invited all authorized deposit-taking institutions that are subject to LCR to apply for their 2021 CLF allocation, effective as at April 01, 2021. The amount of Australian Government Securities and securities issued by the borrowing authorities of the states and territories (AUD HQLA) has increased significantly and is projected to increase further. As a result, future CLF allocations are likely to decrease further. APRA expects to ensure measured CLF reductions to avoid financial market disruptions; however, it would be reasonable to expect that if government securities outstanding continue to increase beyond 2021, the CLF may no longer be required in the foreseeable future.
The LCR is a minimum requirement that aims to ensure that authorized deposit-taking institutions maintain sufficient unencumbered high-quality liquid assets (HQLA) to survive a severe liquidity stress scenario lasting for 30 calendar days. The LCR is part of the Basel III package of measures to strengthen the global banking system. The CLF is intended to be sufficient in size to compensate for the lack of sufficient available HQLA, which in Australia consist of mainly AGS and securities issued by the borrowing authorities of the states and territories.
Keywords: Asia Pacific, Australia, Banking, Committed Liquidity Facility, LCR, HQLA, Liquidity Risk, RBA, Basel, APRA
Previous ArticleJFSA Proposes to Extend Leverage Ratio Revisions for Another Year
The three European Supervisory Authorities (ESAs) issued a letter to inform about delay in the Sustainable Finance Disclosure Regulation (SFDR) mandate, along with a Call for Evidence on greenwashing practices.
The Financial Stability Board (FSB) and the Network for Greening the Financial System (NGFS) published a joint report that outlines the initial findings from climate scenario analyses undertaken by financial authorities to assess climate-related financial risks.
The Financial Stability Board (FSB) published a letter intended for the G20 leaders, highlighting the work that it will undertake under the Indian G20 Presidency in 2023 to strengthen resilience of the financial system.
The International Sustainability Standards Board (ISSB) of the IFRS Foundations made several announcements at COP27 and with respect to its work on the sustainability standards.
The International Organization for Securities Commissions (IOSCO), at COP27, outlined the regulatory priorities for sustainability disclosures, mitigation of greenwashing, and promotion of integrity in carbon markets.
The European Banking Authority (EBA) issued a statement in the context of COP27, clarified the operationalization of intermediate EU parent undertakings (IPUs) of third-country groups
The European Union has finalized and published, in the Official Journal of the European Union, a set of 13 Delegated and Implementing Regulations applicable to the European crowdfunding service providers.
The Office of the Superintendent of Financial Institutions (OSFI) published an annual report on its activities, a report on forward-looking work.
The Australian Prudential Regulation Authority (APRA) finalized amendments to the capital framework, announced a review of the prudential framework for groups.
The Bank for International Settlements (BIS) Innovation Hubs and several central banks are working together on various central bank digital currency (CBDC) pilots.