Regulatory Alerts2014-08-13
Guidelines for the Management of Foreign Exchange Risk Exposure and Placements Abroad by Commercial Banks
The Central Bank of Liberia issued these guidelines to establish prudential limits and reporting standards for commercial banks’ foreign exchange risk exposures and cross-border placements. The regulations cap overall foreign exchange exposure at 40 percent of regulatory capital, single currency exposure at 20 percent, and aggregate foreign placements at 40 percent of networth, with related-party investments restricted to 10 percent. Banks must implement board-approved risk management policies, conduct quarterly internal audits, submit weekly exposure returns, and face daily fines of L$200,000 for failing to correct excesses within the mandated timeframe.
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