The Office of Thrift Supervision on Monday reduced the amount of cash that savings associations must keep on hand.

Under the new rule, liquid assets must equal 4% of deposits and borrowings with less than a one-year maturity. These include Federal Home Loan Bank advances. The previous requirement was 5%.

The rule also eliminated a separate requirement that thrifts hold 1% of their assets in cash or short-term liquid assets. The rule also allows institutions to adjust liquidity levels quarterly, rather than monthly.

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