Regulatory Alerts2021-10-14
Rules of Liquidity System and Regulations for Banking Liquidity Position
The Central Bank of Kuwait mandates local banks to maintain adequate liquidity by applying the Maturity Ladder Approach, which matches asset and liability cash flows across specified time bands. Banks must hold a minimum percentage of Kuwaiti dinar customer deposits as balances with the Central Bank or in treasury instruments, while calculating cumulative mismatch limits that cap funding gaps at 10% to 40% depending on the time horizon. Each institution is required to establish and board-approve internal liquidity policies, supported by effective computer systems, to continuously monitor cash flows, manage contingencies, and report compliance through standardized tables.
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