A spokesperson at the Bank for International Settlements said today (Tuesday) that the Basel Committee on Banking Supervision (BCBS) does not plan to discuss “concrete proposals” to soften Basel III liquidity buffer requirements at a meeting later this month, but said that staff are considering whether the criteria for the definition of liquid assets are appropriate.

In an article “Regulators poised to soften new bank rules”, the Financial Times said yesterday (Monday) evening that “a growing number of members on the Basel Committee on Banking Supervision, which sets the global standards, now want to soften key technical definitions in the ratio”.

The article also said that the changes “would have the effect of reducing how much liquidity banks have to hold, and would allow them to count more corporate and covered bonds toward the total”.

Under a Basel III framework released in December, covered bonds can be included in Liquidity Coverage Ratios (LCRs) as level two assets, which will be limited to up to 40% of these buffers and subject to a haircut of at least 15%. Covered bond market participants have been lobbying for better treatment of the asset class.

In response to a query from The Covered Bond Report, a spokesperson at the BIS said that “there is no plan to discuss concrete proposals to soften the LCR at the upcoming BCBS meeting”.

The meeting takes place on 26-27 September.

The FT article also said that the committee staff is gathering data on the potential impact of the LCR and that “a subgroup is working on the definitions ahead of a full committee meeting this month”.

The spokesperson said that the BIS is doing its quantitative impact assessments every six months.

“We have a number of work streams looking at the various aspects of the proposal, including whether the criteria for the definition of liquid assets are appropriate,” she said.

Under CRD IV proposals for implementation of Basel III in the European Union, the European Banking Authority (EBA) has been charged with deciding what asset classes can be used as level one or level two liquid assets.