Regulatory Alerts2007-02-26
Explanatory Memorandum on the Regulation on the Liquidity of Institutions
The German Federal Ministry of Finance issued the Liquidity Regulation to implement statutory requirements under the Banking Act and transpose EU directives into national law. The regulation mandates that financial institutions maintain sufficient liquidity by calculating standardized ratios across four maturity bands, while explicitly defining eligible payment assets and obligations. It introduces a liberalization clause allowing supervised institutions to use internal risk management systems instead of standard calculations and sets a January 2007 implementation date.
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