US muni treasurers warn LCR could crimp spending

If US regulators do not count muni debt as highly liquid, issuers fear financing cost rise

logan-airport
Logan International Airport: no potholes so far

It may seem unlikely, but if the residents of Cary in North Carolina notice public verges becoming unkempt, or pilots using Boston's Logan International Airport start seeing potholes, there could be a single cause – a rule drawn up in Switzerland and implemented by the US Federal Reserve Board. This rule is the liquidity coverage ratio (LCR). If last October’s Fed draft version is introduced unchanged, bonds issued by US states, cities and towns will not count towards the new liqu