Featured Product

    APRA Reduces Committed Liquidity Facility, Issues Other Updates

    May 09, 2022

    The Australian Prudential Regulation Authority (APRA) announced reduction in the aggregate Committed Liquidity Facility and issued an update on the operational preparedness for zero and negative market interest rates.

    APRA issued a letter to the authorized deposit-taking institutions announcing a reduction in the aggregate Committed Liquidity Facility from AUD 102 billion on January 01, 2022 to AUD 66 billion on May 01, 2022. The announcement on Committed Liquidity Facility follows the September 2021 communication, according to which APRA expects institutions subject to the Liquidity Coverage Ratio (LCR) requirements to reduce their reliance on the Committed Liquidity Facility to zero by the end of 2022, subject to financial market conditions. APRA expects to provide a further update on the size of the aggregate Committed Liquidity Facility following the scheduled reductions on September 01, 2022 and January 01, 2023. 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 Committed Liquidity Facility, which was established with the Reserve Bank of Australia (RBA) in 2015, is intended to be sufficient in size to compensate for the lack of sufficient HQLA, which in Australia consists of notes and coins, Exchange Settlement Account balances held with the RBA, Australian Government Securities (AGS), and semi-government securities. APRA expects institutions to purchase the HQLA necessary to eliminate the need for the Committed Liquidity Facility.

    In addition, APRA issued a letter that sets out its expectations about the operational preparedness for zero and negative market interest rates. APRA announced that the previously advised timeframe of July 31, 2022 for the development of tactical solutions will no longer be relevant. This decision came after a number of deposit institutions, in December 2021, requested for an extension beyond July 31, 2022, citing market conditions and resource pressures due to other priorities. APRA further plans to review its broader strategic approach and will provide an update on its expectations at the appropriate time. 

     

    Related Links

     

    Keywords: Asia Pacific, Australia, Banking, Committed Liquidity Facility, LCR, Liquidity Risk, Negative Interest Rates, Interest Rate Risk, Basel, APRA

    Featured Experts
    Related Articles
    News

    CFPB Finalizes Rule on Small Business Lending Data Collection

    The Consumer Financial Protection Bureau (CFPB) published a final rule that sets out data collection requirements on small business lending, under section 1071 of the Dodd-Frank Act.

    March 30, 2023 WebPage Regulatory News
    News

    BCBS to Consult on Pillar 3 Climate Risk Disclosures by End of 2023

    The Bank for International Settlements (BIS) published a summary of the recent Basel Committee (BCBS) meetings.

    March 23, 2023 WebPage Regulatory News
    News

    FINMA Approves Merger of Credit Suisse and UBS

    The Swiss Financial Market Supervisory Authority (FINMA) has approved the takeover of Credit Suisse by UBS.

    March 21, 2023 WebPage Regulatory News
    News

    BOE Sets Out Its Thinking on Regulatory Capital and Climate Risks

    The Bank of England (BOE) published a working paper that aims to understand the climate-related disclosures of UK financial institutions.

    March 13, 2023 WebPage Regulatory News
    News

    US Congress Report Examines Data Privacy and Cybersecurity Regulations

    The U.S. Congressional Research Service published a report on banking, data privacy, and cybersecurity regulation.

    March 13, 2023 WebPage Regulatory News
    News

    OSFI Finalizes on Climate Risk Guideline, Issues Other Updates

    The Office of the Superintendent of Financial Institutions (OSFI) is seeking comments, until May 31, 2023, on the draft guideline on culture and behavior risk, with final guideline expected by the end of 2023.

    March 12, 2023 WebPage Regulatory News
    News

    EU to Conduct One-Off Scenario Analysis to Assess Transition Risk

    The European authorities recently made multiple announcements that impact the banking sector.

    March 10, 2023 WebPage Regulatory News
    News

    APRA Assesses Macro-Prudential Policy Settings, Issues Other Updates

    The Australian Prudential Regulation Authority (APRA) published an information paper that assesses its macro-prudential policy settings aimed at promoting stability at a systemic level.

    March 07, 2023 WebPage Regulatory News
    News

    BIS Paper Examines Impact of Greenhouse Gas Emissions on Lending

    BIS issued a paper that investigates the effect of the greenhouse gas, or GHG, emissions of firms on bank loans using bank–firm matched data of Japanese listed firms from 2006 to 2018.

    March 03, 2023 WebPage Regulatory News
    News

    HMT Mulls Alignment of Ring-Fencing and Resolution Regimes for Banks

    The HM Treasury (HMT) is seeking evidence, until May 07, 2023, on practicalities of aligning the ring-fencing and the banking resolution regimes for banks.

    March 02, 2023 WebPage Regulatory News
    RESULTS 1 - 10 OF 8810