Hearing on revision of Liquidity Ordinance

Bern, 17.01.2014 - Today, the Federal Department of Finance (FDF) initiated a hearing on the revision of the Liquidity Ordinance (LiqO). The quantitative liquidity standards under Basel III, which were finalised in January of last year, are to be written into Swiss law with the ordinance. The hearing will run until 18 March 2014.

Banks must at all times have sufficient liquidity to be able to meet their payment obligations even in the event of severe liquidity crises. To ensure this is the case, the Liquidity Ordinance, which has been in force since 1 January 2013, sets out the requirements for liquidity management and the calculation of liquidity. Switzerland's regulations concerning the holding of liquidity have thus been aligned with the international standards of the Basel Committee on Banking Supervision (Basel Committee). Regarding the quantitative liquidity requirements, the provisions of the Banking Ordinance had to be adopted in the Liquidity Ordinance for a transitional period, as the Basel III standards were still being revised.

In January 2013, the Basel Committee published the definitive standards for the Liquidity Coverage Ratio (LCR), which determines the liquidity that banks must hold to respond to short-term deteriorations in liquidity. This liquidity may be comprised solely of high-quality liquid assets (HQLA) that can be converted into cash immediately and without major reductions in value in the case of a liquidity stress scenario.

The LCR provisions are to apply for all Swiss banks from 2015. However, according to the Basel Committee's schedule, the LCR requirements do not have to be met in full already on 1 January 2015. It is planned to commence with a degree of fulfilment of 60% and gradually raise this to 100% by the start of 2019. Systemically important banks must meet the LCR requirements in full on 1 January 2015.

The Net Stable Funding Ratio (NSFR), which is also part of the Basel III minimum standards, will probably be undergoing revision by the Basel Committee until mid-2016. Thereafter, it too should be incorporated into Swiss law in the same way.

Address for enquiries

Daniel Saameli, Media Spokesperson FDF
Tel. 031 322 60 86, daniel.saameli@gs-efd.admin.ch