RiskTech Forum

SAS: Liquidity Optimization - A Step Beyond Basel III Compliance

Posted: 1 February 2015  |  Source: SAS

The Basel Committee on Banking Supervision made substantial revisions to its capital adequacy guidelines in recent years to include more-demanding capital and liquidity requirements. National banking authorities around the world are adopting the new Basel III framework with the goals to eliminate systemic liquidity risk and to promote greater transparency of risk management practices. These changes will be a challenge to banks that try to improve their asset and capital returns.

In an article Charles Goodhart wrote for the Financial Stability Review report, he says, “The word liquidity has so many facets that it is often counterproductive to use it without further and closer definition.”1 Banks would prefer to reserve the minimum liquid assets or cash to meet their liquidity needs and regulatory requirements because any excess cash reserves can decrease their investment and revenue growth opportunities.

This dilemma has bank officers asking questions, such as:

The good news is that all of those questions can be addressed with SAS’ liquidity optimization solution.

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