After months of contentious debate, the Committee of Central-Bank Governors and Heads of Supervision (GHOS) that oversees the Basel Committee has crafted a set of revisions to the 2010 Basel III liquidity accord. Although often characterized as a “watering-down” of the accord, the specific revisions in fact are relatively modest and may not be acceptable and/or practical in certain nations (e.g., the U.S.) or adopted in other nations (e.g., Australia) now granted flexibility to use an “alternative liquidity approach.” The most significant relief granted to large banks is new treatment of the liquidity “buffer,” with the final standards making clear that liquidity under severe stress or even due to bank-specific factors may drop below the target 100 percent LCR (flexibility not allowed in pending U.S. standards). The final rules also provide an extended time frame for the liquidity standards. 

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