MNB Calls on Lenders to Step up Proactive Liquidity Management

MNB

Photo by Jessica Fejos

The National Bank of Hungary (MNB) has called on lenders to strengthen their proactive liquidity management amid the impacts of the recession and liquidity risks presented by potential outflow phenomena affecting deposits in an executive circular, the central bank and financial market regulator said on Friday, according to a report by state news wire MTI.

MNB said banks should review their existing risk management practices in the context of the current liquidity risks. Lenders that do not apply a recommended liquidity buffer over the regulatory threshold can expect additional monitoring and data provision requests, it added.

If the liquidity coverage ratio (LCR) - the stock of high-quality liquid assets banks must hold to cover net cash outflows during a 30-day period - stipulated by European Union rules is under 140%, lenders must have in place an advanced system for gauging risk as well as tools to manage any possible sudden drop in liquidity, MNB said.

Lenders have until September 30 to adopt the stipulations in the executive circular and must transpose them into their internal regulations by December 31.

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