Central Bank establishes new liquidity management requirements for banks following Basel III recommendations
9 agosto 2018

On August 6th the Central Bank of Chile (BCCh) issued a regulation that establishes minimum compliance requirements for the short-term liquidity coverage ratio (LCR). It seeks to adapt national regulations to the international recommendations of the Basel III agreement. The regulation came into force on August 7th with its publication in the Official Gazette, through the CVE 1442734 standard. It establishes a progressive mechanism to meet the recommended coverage by 2023. Financial institutions will have to present plans to meet the new requirements and their compliance will be supervised by the Superintendency of Banks and Financial Institutions (SBIF).


This new requirement, the result of a public consultation completed in June, concludes that in the framework of the international implementation of Basel III, it is appropriate to move forward with the imposition of a minimum limit on quantitative LCR. To this end, it introduces a timetable for the gradual implementation of minimum limits for this indicator. Thus, from January 2019 on, the minimum level required for the LCR will be 60 per cent, a level which will be increased by 10 percentage points each year until it converges to a minimum of 100 per cent on January 2023.


Furthermore a section is incorporated into the Central Bank’s regulation in which a basic protocol for the administration of situations of non-compliance with the limits established in this regulation is defined. In the event of a breach of these limits, the bank must inform of the situation and submit an action plan to the SBIF in order to comply with the limits as soon as possible.


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