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MAS Invites Comments on Enhancements to Liquidity Risk Supervision Framework
Posted on Friday, May 19, 2006 - 10:00 AM

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.

4. MAS invites comments on the consultation paper which can be found on the MAS website [www.mas.gov.sg]. Comments may be submitted to liquidity@mas.gov.sg by 30 June 2006.

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