Australia cbank plans bank facility for Basel
SYDNEY: Australia's central bank on Friday said it would establish a liquidity facility to allow local banks to meet new Basel rules on highquality liquidity requirements.
The Reserve Bank of Australia (RBA) said an authorised deposit-taking institution (ADI) would be able to establish a committed secured liquidity facility with the RBA, sufficient in size to cover any shortfall between the ADI's holdings of high-quality liquid assets and the liquidity coverage ratio set by Basel.
Qualifying collateral for the facility would comprise all assets eligible for repurchase transactions with the RBA under normal market operations. In return for the committed facility, the RBA would charge a market-based commitment fee.
Australian banks would have had trouble meeting the new Basel standards since there was not enough high-quality liquid assets, such as government bonds, in the country for them to hold. - PB News