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Decisive SARB move on supporting liquidity regulations
With the liquidity coverage ratio looking to be implemented largely unchanged come 2015, the SARB approved this week a R240 billion rand emergency support facility, which will come into effect from January 2013.
This reserve facility, represents a Level 1 asset for participating banks (as mentioned in Section 40 (b) of Basel III: International framework for liquidity risk measurement, standards and monitoring), designed to meet the 30% shortfall in high-quality liquid assets South African banks were likely to experience in satisfying the liquidity coverage ratio.
The Reserve Bank has shown a firm commitment to seeing that local institutions meet Basel III regulations, whatever the outstanding controversies around certain aspects of the regulation might be (e.g. Greek debt qualifying as a Level 1 asset under the current version of the liquidity rules).