The China Banking Regulatory Commission has issued new guidance on liquidity risk management for commercial banks, in an effort to maintain adequate liquidity and ensure the safety and stability of China's banking industry. The guidance, covering five chapters and 86 articles, includes provisions on such matters as the purpose of liquidity risk management, the establishment of a management system, management methods and techniques, and supervision management.
The CBRC has always focused on maintaining adequate liquidity in commercial banks, by keeping the maximum loan-deposit ratio at 75 per cent and conducting regular stress tests, according to a spokesman. This had helped the Chinese economy weather the financial crisis, the regulator argued, noting that by September 2009, the liquidity ratio of commercial banks in the country averaged 41.7 per cent, far higher than 25 per cent minimum supervisory requirement.
"The outbreak of the global financial crisis highlighted the importance
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