Recommendation on the Amendment of Local Liquidity Management Framework by Referencing Basel III Regulatory Framework

• Main Authors: Chang, Shu-Ping, 張淑萍
• Other Authors: Wang, Wen-Chieh
• Format: Others
• Language: zh-TW
• Published: 2019
• Online Access: http://ndltd.ncl.edu.tw/handle/ead73d

碩士 === 國立政治大學 === 法學院碩士在職專班 === 107 === The financial service industry enjoyed ample liquidity before the beginning of the global financial crisis in 2007. However, during the financial crisis, a couple of banks struggled to maintain adequate liquidity and required significant liquidity support from central banks or the financial system. Nonetheless, a number of banks failed or had to be bailed out even after such extensive support by local governments and central banks, and the global market upheaval showed how quickly liquidity risks could burn up banks’ available sources of funding. Since the crisis began, liquidity risk management and supervision have moved up the global regulatory agenda of international regulatory bodies. One of the Basel Committee’s key reforms is to develop a more resilient banking sector by introducing two separate but complementary measures (1)the Liquidity Coverage Ratio, to promote short term resilience of a bank’s liquidity risk profile by ensuring that it has sufficient High Quality Liquid Asset(HQLA) to survive a significant stress scenario lasting for one month; and(2)Net Stable Funding Ratio (NSFR), to promote re silience over a longer time horizon (one year) by creating incentives for banks to fund their activities with more stable sources of funding on an ongoing basis. In Taiwan, although regulations on liquidity management keep evolving, some are either out of date, can not meet the legislative purposes, or are no longer in line with global trends. Therefore, this paper intends to examine the existing liquidity management framework in Taiwan, analyze the discrepancy between local and global requirements under Basel III, and provide recommendations to minimize the gap.