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    FED Proposes to Revise Guidance on Managing Funding and Liquidity Risk

    June 25, 2019

    FED is proposing to revise and extend, for three years, the interagency policy statement on funding and liquidity risk management (FR 4198; OMB No. 7100-0326). The guidance summarizes principles of sound liquidity risk management that the agencies had identified in the past and, where appropriate, harmonized those principles with the “Principles for Sound Liquidity Risk Management and Supervision,” which were issued by BCBS in September 2008. The consultation period ends on August 26, 2019. FED also published a supporting statement for the interagency policy statement on funding and liquidity risk management.

    The interagency policy statement on funding and liquidity risk management (guidance) was issued to provide consistent interagency expectations on sound practices for managing funding and liquidity risk. FED is proposing to revise FR 4198 to account for certain aspects of the guidance that include recordkeeping provisions for liquidity risk management policies, procedures, and assumptions and contingency funding plans. At present, FR 4198 does not account for the recordkeeping provisions for contingency funding plans and does not fully account for the recordkeeping provisions related to liquidity risk management policies, procedures, and assumptions.

    The guidance also includes a number of voluntary recordkeeping provisions that apply to bank holding companies, savings and loan holding companies, state-licensed branches and agencies of foreign banks (other than insured branches), corporations organized or operating under sections 25 or 25A of the Federal Reserve Act, and state member banks. The estimated number of respondents for implementing recordkeeping is 30 and for ongoing recordkeeping is 4,789. No required reporting forms are associated with the guidance (the FR 4198 designation is for internal purposes only). The documentation required by the guidance is maintained by each institution; therefore, the documentation is not collected or published by FED. The guidance was published jointly by the agencies; however, there has been no consultation outside of the Federal Reserve System with regard to the current proposal to extend the FR 4198 for three years, with revision.


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    Comment Due Date: August 26, 2019

    Keywords: Americas, US, Banking, FR 4198, Supporting Statement, Liquidity Risk, BCBS Principles, FED

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