EU SRB Liquidity Funding in Resolution
On Apr. 30, EU SRB issued new guidance on liquidity in resolution.
- EU SRB has published new guidance for banks on liquidity and funding in resolution.
- Follows EU SRB Oct. 2019 issued consultation re expectations for banks, see #66575.
- New Guidance
- Market participants likely reluctant to roll-over or provide new funding to bank in crisis.
- Even after successful resolution, liquidity stress may persist for some time due to the asymmetry of information regarding viability of the resolved bank’s business model.
- Banks need to ensure they continue to meet their obligations during resolution phases.
- Expectations for Banks
- Methodologies to estimate liquidity needs for implementation of resolution strategy.
- Measure, report and forecast their liquidity position and relevant liquidity metrics.
- Identify and mobilize assets to be used as collateral to obtain liquidity in resolution.
- Anticipate legal, regulatory, operational obstacles to mobilization in a stressed market.
- Focuses on estimation of liquidity needs to enhance banks’ resolvability for resolution.
- Banks can expect to be assessed on this element in the 2021 resolution planning cycle.
- Next Steps
- There will be further guidance for the two remaining elements published in 2022.
- Expectations are subject to gradual phase-in according to general phase-in dates.
- Expectations on liquidity and funding in resolution expected to be met by end of 2023.
||B/D; Bank; BHC; Depo; Exch; SIFI
||Gd, PR 4/30/2021
||Financial; Reporting; Resolution; Risk; Treasury
||Banking; Clearing; Derivatives; Equity; Securities
|Reg. Last Update
Last substantive update on 05/03/2021