The liquidity lifeline

The Basel Committee intends to introduce internationally binding


On the priority list of risk managers and regulators, liquidity has long been cast as the poor relation to capital. Under the Basel framework, supervisors have expended a great deal of effort ensuring banks hold adequate capital to manage credit and market risks, while adopting a more laissez-faire approach to the way they actually fund their activities. But the financial crisis demonstrated the worrying extent to which banks had come to rely on short-term, unstable sources of funding to acquire

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