Federal Council adopts amendment of Ordinance on Liquidity of Banks

Bern, 22.11.2017 - During its meeting on 22 November 2017, the Federal Council adopted an amendment of the Ordinance on the Liquidity of Banks. Once the new provisions enter into force on 1 January 2018, particularly smaller financial institutions will benefit from an easing in terms of the liquidity coverage ratio (LCR). In contrast, the introduction of the net stable funding ratio (NSFR), which was originally planned for 1 January 2018, has been postponed. The Federal Council will reconsider the matter at the end of 2018.

The liquidity risk management and monitoring of banks has been governed by the ordinance since 2012. The ordinance defines both the qualitative and quantitative requirements in this area and transposes the international standards of the Basel Committee on Banking Supervision (Basel Committee) into Swiss law. The LCR was introduced in 2014, and the remaining requirements of the Basel Committee, i.e. on the funding ratio, still have to be implemented. Complementing the LCR, which boosts banks' resilience in the case of short-term liquidity crises, the NSFR aims to ensure stable funding over the long term.

According to the Basel Committee's original timing specifications, the NSFR provisions were to enter into force on 1 January 2018. In view of the delays with the introduction of the NSFR on EU and US financial markets, the Federal Council has decided not to include this in the Liquidity Ordinance until later on and to consider the next steps again at the end of 2018.

Consequently, the amendment of the ordinance is initially restricted to the creation of the statutory basis required to facilitate matters specifically for smaller banks regarding the LCR. The opportunity will also be taken to make some minor LCR adjustments that have proved to be necessary.

Address for enquiries

Anne Césard, Communications, State Secretariat for International Financial Matters SIF
Tel. +41 58 462 62 91, anne.cesard@sif.admin.ch