Guidance Note 5/2019: Continued Provision of a Committed Liquidity Facility by the South African Reserve Bank to Banks

Ref.: 15/8/1/2
G5/2019
To banks, branches of foreign institutions, controlling companies, eligible institutions and auditors of banks or controlling companies Guidance Note 5/2019 issued in terms of section 6(5) of the Banks Act, 1990 Continued provision of a committed liquidity facility by the South African Reserve Bank to banks Executive summary The South African Reserve Bank (SARB) will continue to provide a committed liquidity facility (CLF) to banks to ensure banks’ continued compliance with liquidity coverage ratio (LCR) requirements. The Guidance Note provides for revised guidelines and conditions relating to the continued provision and the phase out of the CLF. This guidance note replaces Guidance Note 4/2018

1. Introduction
   1.1 The Basel III LCR framework 1 makes provision for jurisdictions with an
   insufficient supply of High Quality Liquid Assets (HQLA), in their domestic currency to meet the aggregate demand of banks in domestic currency, to provide a committed liquidity facility by the central bank for a fee.
   1.2 Since 2012, the SARB has made available a CLF in order to assist banks to
   comply with the requirements related to the LCR.
   1.3 This Guidance Note contains revised guidelines and conditions relating to the
   continued provision of the CLF, specifically in respect of the period 1 December 2019 to 30 November 2020 and signals the SARB’s intention to phase out the CLF by 1 December 2021.
2. Eligible collateral
   2.1 No changes are made to the criteria for eligible collateral that was previously
   published. Detailed information on the collateral requirements is available in the Addendum to the Operational Notice of the Financial Markets Department of the SARB, which is available on the SARB’s website2. 1 Available online at Basel III LCR framework 2 http://www.resbank.co.za/Lists/News%20and%20Publications/Attachments/7514/CLFOperational%20Notice Addendum_August2016.pdf