The Australian Prudential Regulation Authority (APRA) has
released further guidance on how it will treat authorised
deposit-taking institutions' (ADIs) applications to establish a
secured committed liquidity facility (CLF) as part of its
implementation of the Basel III liquidity framework in
Australia.
APRA clearly acknowledges the role of a CLF to the extent that
ADIs do not hold enough Australian dollar high-quality liquid
assets (HQLA) to satisfy the liquidity coverage ratio (LCR) regime,
but it has made it clear that ADIs requiring a CLF ("scenario
analysis ADIs") are still expected to improve their liquidity
risk profiles both before and after the LCR regime commences:
"ADIs have made steady and material improvements to
[ADIs'] liquidity risk profiles, but more remains to be done in
both the quantitative and qualitative dimensions of liquidity risk
management."
