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China drafts new requirements on banks to curb liquidity risks

Updated: Dec 6,2017 8:30 PM     Xinhua

BEIJING — China’s banking regulator announced new requirements on Dec 6 for lenders to better guard the sector against liquidity risks.

The China Banking Regulatory Commission (CBRC) introduced three new indicators into a draft revised rule on liquidity risk management that will take effect on March 1, 2018.

The net stable funding ratio, one of the three new gauges, measures banks’ long-term stable funding to support business development, according to a CBRC statement.

The ratio will apply to lenders with assets of no less than 200 billion yuan ($30.2 billion).

The high-quality liquid assets adequacy ratio, which evaluates whether banks have enough high-quality liquid assets to cover short-term liquidity gaps when under stress, will apply to lenders with assets below 200 billion yuan.

The liquidity matching ratio, which applies to all lenders, gauges how well the banks’ assets and liabilities are matched in maturity.

All three ratios are required to stay no lower than 100 percent.

The move can “help commercial banks improve their capability in liquidity risk management,” said the CBRC statement.