BASLE III LIQUIDITY STANDARDS

Scientific review article
Autor: Borko Kljajić MSc

Summary: This paper presents two new standards for maintaining liquidity according to the latest Basle III Accord: liquidity coverage ratio and net stable funding ratio. The paper features the basics for their calculation, together with the elements of calculation, and the phase-in arrangements of Basle III. The new standards in terms of liquidity are, in addition to the stricter interpretation of capital charges, introduction of countercyclical and conservation buffers, the most significant changes to be introduced by the new set of rules. In the Basle Committee documents so far, liquidity has not been expressed through numerical values, so that there was no concrete framework for their calculation.
Although at the moment it is almost impossible to quantify additional capital that the new rules would require, and the impact they will exert on the movements of gross domestic product, the papers provides a list of several papers in this field aimed at forecasting the costs of implementation and potential impact on GDP. Despite the inevitable costs, however, the implementation of the two new liquidity standards should prevent the occurrence of the new crises in the future, i.e. reduce the possibility of their occurrence.

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