The Fed’s New Liquidity Benchmark For Banks: Main Points

Last week the Fed proposed a new Notice of Proposed Rulemaking (NPR) that stipulates a standard for liquidity to be maintained by banks to weather any financial crisis. Liquidity refers to cash, government bonds and other high-quality assets that are readily convertible into cash.  The Fed’s benchmark is more rigorous than even that set by the Basel Committee.

Fed’s liquidity benchmark

The large banks (those with more than $250B in assets) must have adequate liquidity to support operations for 30 days. Other banks (assets over $50B but less than $250B) need...