Both are part of the "Basel III" minimum standards from the
global Basel Committee of banking regulators following the
2007-09 financial crisis when taxpayers had to bail out lenders.
"I think the system will probably need to adjust both the
definitions of LCR and NSFR," Carney said.
These buffers should also count a bank's access to central
bank liquidity as part of their calculations, he added.
The United States has generally applied Basel standards only
to its biggest banks, which did not include Silicon Valley Bank.
"It's a good idea to actually put in place the net stable
funding ratio. That was one of the reforms not applied fully in
the U.S. and, you know, with some cost," Carney said.
Bank of England Deputy Governor Sam Woods told lawmakers
last week that bank liquidity rules might now be an open
question for international policymakers.
(Reporting by Huw Jones; Editing by Christina Fincher)
By Huw Jones
LONDON, April 4 (Reuters) - Banking rules introduced
following the global financial crisis more than a decade ago
need "rethinking" to reflect how quickly cash can exit a lender
in a digital age, former Bank of England Governor Mark Carney
said on Tuesday.
The collapse of Silicon Valley Bank in the United States
last month highlighted the "greater flightiness" of desposits,
particularly those of small business clients, Carney told a
Reuters Breakingviews podcast.
Over $40 billion left Silicon Valley Bank in 24 hours,
leaving authorities confronting a new risk: the social media
bank run as depositors can withdraw cash with just a few taps on
their phone.
"That will, I think, require some rethinking of the
assumptions behind liquidity coverage ratio, the net stable
funding ratio," Carney said, referring to the LCR and NSFR.
The LCR aims to ensure that banks have enough cash or high
quality bonds to survive stresses in markets for a month, while
the NSFR seeks to reduce funding risks over a longer term
horizon.
Disclaimer: The views expressed in this article are those of the author and may not reflect those of Kitco Metals Inc. The author has made every effort to ensure accuracy of information provided; however, neither Kitco Metals Inc. nor the author can guarantee such accuracy. This article is strictly for informational purposes only. It is not a solicitation to make any exchange in commodities, securities or other financial instruments. Kitco Metals Inc. and the author of this article do not accept culpability for losses and/ or damages arising from the use of this publication.