This chapter describes alternative liquidity approaches available in jurisdictions with an insufficient supply of Level 1 high-quality liquid assets in their domestic currency.

Version effective as of 15 Dec 2019

First version in the format of the consolidated framework.

Introduction

31.1 Some jurisdictions may have an insufficient supply of Level 1 high-quality liquid assets (HQLA), or both Level 1 and Level 2 HQLA, [Insufficiency in Level 2 assets alone does not qualify for the alternative treatment.] in their domestic currency [For member states of a monetary union with a common currency, that common currency is considered the "domestic currency".] to meet the aggregate demand of banks with significant exposures in this currency. To address this situation, the Basel Committee has developed alternative treatments for holdings in the stock of HQLA, which are expected to apply to a limited number of currencies and jurisdictions.

31.2 Eligibility for such alternative treatment will be judged on the basis of the principles and qualifying criteria set out in LCR31.20 and explained further in LCR31.24 to LCR31.61.

31.3 There are three alternative treatments available:

(1) contractual committed liquidity facilities from the relevant central bank, for a fee (Option 1);