• LM-5.2 LM-5.2 Composition of Liquidity Cushion

    • LM-5.2.1

      The liquidity cushion must be largely made up of high quality liquid assets (the most liquid, unencumbered and readily marketable assets such as cash, other high quality government debt securities, etc.) or similar instruments, that can be easily or immediately monetised with little or no loss or discount at all times, irrespective of the bank's own condition.

      August 2018

    • LM-5.2.2

      To cater for any extension or deterioration of any stress situation, a bank may widen the composition of its liquidity cushion by holding other liquid and marketable assets which can be used to cater for the longer end of the stress period (e.g. 1 month or beyond) without resulting in excessive losses or discounts.

      August 2018

    • LM-5.2.3

      A bank must document its policies and criteria for defining the liquid assets to be included in its liquidity cushion and distinguishing their relative levels of quality in terms of their ability to generate liquidity swiftly, with little loss or discount. MIS reports must be in place to facilitate continuous management of a bank's liquidity cushion.

      August 2018