WASHINGTON — The federal bank agencies released final guidelines Wednesday urging better management of liquidity risk.
The guidelines are meant to align earlier regulatory policies with a September 2008 document from the international Basel Committee on Bank Supervision.
Under the new standards, institutions are expected to use cash-flow projections and stress-testing, have diverse funding sources and maintain a cushion of liquid assets.
"The agencies expect every depository financial institution to manage liquidity risk using processes and systems that are commensurate with the institution's complexity, risk profile and scope of operations," the regulators said in the guidelines. "Liquidity risk management processes and plans should be well documented and available for supervisory review. Failure to maintain an adequate liquidity risk management process will be considered an unsafe and unsound practice."
The guidelines urge an institution's liquidity risk procedures to "be sufficient to meet its daily funding needs and cover both expected and unexpected deviations from normal operations."
The agencies proposed these guidelines in July, and received only 22 comment letters. The final version was largely unchanged from the proposal.
