The U.S. rules are considerably more stringent than the global liquidity standard, and come into effect for the biggest banks not only more quickly than the global standards, but also in concert with tougher capital rules. As a result, the standards will have significant business and policy impact (e.g., funding ring-fencing within multi-bank/cross-border firms) even though regulators believe the largest U.S. institutions are generally already in compliance with them. Regional banks for which the LCR is more challenging are given some latitude to facilitate compliance, but many will likely still find it problematic due to their current reliance on holdings not given the credit commenters argued they deserved. Importantly, the final rule permits covered institutions to fall below the 100 percent ratio, making it a buffer; however, significant restrictions are imposed to ensure that exceptions are rare and very quickly corrected. Decisions about which assets do or do not count for positive consideration will have significant effect on these asset classes, with municipal-bond issuers and GSEs most concerned about the adverse impact of the new standards for marketing their obligations and those derived from them.
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