Central Bank Body Calls for More Detailed Monitoring of Bank Liquidity Risks

Bank for International Settlements, says Banking supervisors should ensure that individual entities of global banks have sufficient liquidity rather than just monitoring risks at group-level.

Reuters reports that in a report to G20 finance ministers and central bank governors, the BIS, the umbrella body for central banks worldwide, said current monitoring tools were broadly fit for purpose and that liquidity regulations alone cannot prevent all bank runs in age of digital banking and easy access to information.

The emergency takeover of Credit Suisse by UBS has forced a rethink on whether liquidity rules that emerged from the financial crisis are fit for purpose.

These regulations did little to avert last year’s crash, as clients pulled cash from banks at unprecedented speed.

Credit Suisse saw billions of deposits exiting in a matter of days, burning through what had appeared to be comfortable buffers of cash. The bank’s Swiss unit was hit the hardest.