MAS Invites Comments on Enhancements to Liquidity Risk Supervision Framework
Singapore, 19 May 2006...The Monetary Authority of Singapore (MAS) today released a consultation paper on the proposed enhancements to the liquidity risk supervision framework.
2 The current liquidity risk supervision framework, as articulated in MAS Notice 613, has been in place since 2001. The framework allows banks to adopt a general methodology or risk-sensitive methodology to determine regulatory liquidity reserves depending on their level of sophistication. While it has worked well, certain aspects of the framework could be fine-tuned.
3 MAS is therefore proposing changes to the minimum regulatory liquidity requirements. These changes include a revised set of 'Qualifying Liabilities' to replace 'Liabilities Base' , an expanded range of eligible liquid assets, a revised computation formula and maintenance period, and a revised Tier 1 requirement. In addition, to ensure that banks will be better able to manage liquidity stress situations on a timely basis, the process for drawing down of regulatory reserves will be streamlined.