The Wall Street Journal reports that new rules are being proposed so that large U.S. banks would have to prove they have enough cash to withstand severe market turmoil lasting as long as a year
- The change is proposed by the Federal Reserve, the Federal Deposit Insurance Corp. & the Office of the Comptroller of the Currency
- The new requirement is the "net stable funding ratio" (NSFR), - to encourage banks to rely more on sources such as core deposits and longer-term funding from small businesses, and less on short-term wholesale funding
The WSJ has more, here (may be gated)
Critics say such a new rule
- Could lessen banks' profits (they'd have to hold more low-return investments &/or use higher-cost sources of cash)
- Could force banks to curb their trading in certain types of instruments &/or pull back from certain types of loans
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I ensure I have a year's worth of liquidity in my fridge around the Christmas/New Year period. Which then usually lasts a couple of days.