The Board of Governors of the Federal Reserve System (FRB) approved a proposed rule (the NPR) to strengthen the liquidity positions of large financial institutions that would create for the first time a standardized minimum liquidity requirement (namely, a minimum liquidity coverage ratio or LCR). The NPR would apply to banking organizations with $250 billon or more in total assets or $10 billion or more in on-balance sheet foreign exposures, as well as to non-bank financial institutions designated “systemically important” by the Financial Stability Oversight Council. A different version of the LCR with a 21-day stress period and a reduced outflow test would apply to depository institution holding companies with total consolidated assets of $50 billion or more that are not internationally active.
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