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Fed proposes new liquidity rule for large financial institutions

The Federal Reserve Board proposed a rule on Thursday to strengthen the liquidity positions of large financial institutions, the Fed stated. The proposal would for the first time create a standardized minimum liquidity requirement for large and internationally active banking organizations and systemically important, non-bank financial companies designated by the Financial Stability Oversight Council, the central bank said. These institutions would be required to hold minimum amounts of high-quality, liquid assets such as central bank reserves and government and corporate debt that can be converted easily and quickly into cash, it added. Each institution would be required to hold liquidity in an amount equal to or greater than its projected cash outflows minus its projected cash inflows during a short-term stress period.