Regulatory Alerts2021-04-15
Directive 4/2021 on Externally-Facilitated Liquidity Stress Simulations
The Prudential Authority issued Directive 4/2021 to mandate that Domestic Systemically Important Banks conduct externally-facilitated liquidity stress simulations at least once every four years on a bank-solo level. The directive requires these simulations to evaluate early stress identification, funding adequacy, contingency planning, and systemic risk mitigation, with mandatory participation from Prudential Authority and South African Reserve Bank representatives. Institutions must complete their first compliant simulation within twelve months of the directive's effective date or leverage recent exercises to adjust their testing schedules.
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