3. Sound Principles (LCR, Basel III)

Definition

The difficulties experienced by some banks were due to lapses in basic principles of liquidity risk management.

In response, as the foundation of its liquidity framework, the Committee in 2008 published Principles for Sound Liquidity Risk Management and Supervision (“Sound Principles”).(2) The Sound Principles provide detailed guidance on the risk management and supervision of funding liquidity risk and should help promote better risk management in this critical area, but only if there is full implementation by banks and supervisors.

As such, the Committee will continue to monitor the implementation by supervisors to ensure that banks adhere to these fundamental principles.

Additional information:

(2) The Sound Principles are a vailable at www.bis.org/publ/bcbs144.htm.

Related terms:

Parent term:

Introduction (LCR, Basel III)

Sibling terms:

1. LCR objective (LCR, Basel III)
2. Importance of liquidity (LCR, Basel III)
4. Minimum standards for funding liquidity (LCR, Basel III)
5. Jurisdiction coverage of standards' parameters (LCR, Basel III)
6. LCR standard applicability (LCR, Basel III)
7. Complementary monitoring tools (LCR, Basel III)
8. Phase-in arrangement for implementation (LCR, Basel III)
9. Phased introduction of the LCR (LCR, Basel III)
10. LCR schedule (LCR, Basel III)
11. LCR exceptions (LCR, Basel III)
12. NSFR establishment (LCR, Basel III)
13. Document organisation (LCR, Basel III)