Liquidity
Bank of Greece Governor's Act 2614 of 7 April 2009, as amended by BCC Decision 285 of 9 July 2009, issue 8, and Bank of Greece Governor’s Act 2626 of 29 July 2010, has complemented and enforced the framework and the main principles for the management of liquidity of the credit institutions, that had been formerly set by the abolished Bank of Greece’s Governor’s Act 2560/1 April 2005. Specifically, the main changes which were introduced are the following:
a) The obligation for abiding and submitting Liquidity set ratios and relevant data on a consolidated basis, in addition to the former obligation which had been stipulated only on a solo basis.
b) The adoption of Liquidity Management Guidelines of the Committee of European Banking Supervisors and of the Basel Committee for Banking Supervisor, which have incorporated all relevant experience from the current financial crisis. Special focus has been given to:
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The conduct of stress testing exercises, which cover not only the needs on a short term basis, but also the long term needs, and if possible, the correlation of liquidity risk with other risks.
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The enhancement of the role of the Board of Directors of each credit institution, in relation to liquidity risk management, by setting the strategy and covering policy making and management issues. Emphasis has been given on the adoption of all relevant measures for the adjustment of internal procedures and limits, in accordance with the nature and risk profile, that they are willing to undertake, in addition to the contingency plans for liquidity crisis scenarios.
c) The provision of incentives for the avoidance of too much dependence on the financial and capital markets, with the adoption of the appropriate technical adjustment on the calculation of liquidity ratios
d) The adoption of criteria for distinguishing deposits, to retail and wholesale, given that these categories bear different characteristics of liquidity risk, i.e. different volatility levels. Credit institutions are encouraged to conduct behavioural analysis of these categories, in order for Bank of Greece to assess any further adjustments needed on certain technical factors for liquidity ratios.
List of documents
Bank of Greece Governor's Act 2614 of 7 April 2009: “Framework for the supervision of the liquidity of credit institutions by the Bank of Greece”
Liquidity templates submitted to the Bank of Greece on solo basis (Annex IV to the abovementioned Act)
Banking and Credit Committee Decision 285 of 9 July 2009, issue 8: “Amendment of the Bank of Greece Governor's Act 2614 of 7 April 2009” (currently available only in Greek language)
Bank of Greece Governor’s Act 2626 of 29 July 2010: “Amendment of the Bank of Greece Governor’s Act 2614 of 7 April 2010 “Framework for the supervision of the liquidilty of credit institutions by the Bank of Greece” (currently available only in Greek language)
IMPORTANT NOTICE: The preceding Decision a) indexes the text into the quotations “Assets provided as eligible collateral with the Central Bank … shall not be included in the total claims” of Section A1 of Annex I to the abovementioned Act as paragraph 3.2.; and b) modifies the definition of the Denominator in Section B of Annex I to abovementioned Act as follows:
Short-term liabilities = Liabilities maturing within 12 months, including 80% of the total balance of sight deposits, current accounts and savings accounts, i.e. the sum of [(Total Liabilities (0-12 months) in Template A2 plus 65% of the amount under column “Total” of items (2a + 2b + 2c + 2d) plus 65% of the amount under column “Total” of items (3a + 3b + 3c + 3d) in Template A2].
The Bank of Greece Governor’s Act 2626/2010 provides for the ability of non deposit taking credit institutions to hold, in exceptional circumstances and for a maximum period of two years, a minimum liquid asset ratio of up to 10%. The lower ratio shall be subject to the prior approval of the Bank of Greece, after evaluating the information provided based on Governor’s Act 2614/2009 both on solo and consolidated basis as well as the size, the systemic importance, the nature, the variety and the complication of the activities provided by the credit institution.