Rethinking banks' liquidity requirements

Highlights

• The 2023 banking turmoil underscored the complementarity of self-insurance-oriented minimum liquidity requirements and central bank liquidity support in safeguarding financial stability.
• Despite their complementary nature, these two core components of the policy framework are often treated separately. 
• This paper proposes a framework bridging both components, with the objective of providing a flexible approach to address extreme liquidity stress.

The views expressed in this publication are those of the authors and do not necessarily reflect the views of the BIS, its member central banks or the Basel-based standard-setting bodies.