On 11 October 2024, the Basel Committee on Banking Supervision (Basel Committee) published a report providing an update to G20 Finance Ministers and Central Bank Governors on its analytical work of the 2023 banking turmoil. Specifically, the report provides an update on the analytical work on liquidity risk dynamics that were observed during the turmoil and builds on the stocktake report published in October 2023. It includes updated empirical analysis on the liquidity outflow rates experienced by distressed banks during the turmoil and assesses the materiality of liquidity risk factors that are not explicitly covered by the Basel III Liquidity Coverage Ratio (LCR). The report also analyses the impact of the accounting treatment and valuation of liquid assets eligible to meet the LCR and other potential impediments to banks’ ability and willingness to draw down their liquidity buffer. It also assesses the use and role of supervisory monitoring tools and other stress indicators.
Next steps
The Basel Committee is pursuing a series of follow-up initiatives related to the turmoil, including:
- Prioritising work to strengthen supervisory effectiveness and identify issues that could merit additional guidance at a global level.
- Pursuing additional follow-up analytical work based on empirical evidence to assess whether specific features of the Basel Framework performed as intended during the turmoil, such as liquidity risk and interest rate risk in the banking book, and assessing the need to explore policy options over the medium-term.