Basel III guidelines may increase systemic liquidity risk for Indonesian banks

A reliance on liquid demand deposits may pose problems for Indonesian banks with no other obvious sources of funding

jakarta-emergingasia

The imposition of the Basel III liquidity coverage ratio requirements on the Indonesian banking sector may result in an increase in systemic liquidity risk in the South-east Asian country, according to market participants.

Bank Indonesia – the country's central bank and financial regulator – released a consultation document asking for industry feedback on the potential impact of Basel III earlier this summer. Industry players have highlighted liquidity as being a potential issue because bank

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