Regulatory provisions enacted by EU directive in 2007 on the liquidity of banks, including issuers of electronic money. According to the LiqV, an institution’s liquidity is generally considered to be sufficient if – the cash and cash equivalents available for the following month (first maturity band) – calculated from the respective reporting date – at least cover the payment obligations available for this period. – This standard approach may not be satisfactory in every case in view of the uneven size of the institutions, the sometimes very different business areas and even the global activities of an institution. The banks in question must therefore supplement the standard approach accordingly in their internal risk calculations. – The requirement to guarantee solvency at all times in the LiqV picks up on the statutory requirement in Section 11 of the German Banking Act (KWG). However, if the funding channels were to collapse (as in the wake of the subprime crisis), liquidity bottlenecks and even insolvencies could occur despite planned enforcement of the standardized approach. – See counterparty, central, liquidity buffer, risk and solvency assessment, proprietary, solvency regulation. – Cf. BaFin’s 2005 Annual Report, p. 109; Deutsche Bundesbank’s December 2006 Monthly Report, p. 87 f. (amendment of the LiqV); Deutsche Bundesbank’s 2006 Annual Report, p. 95 f. (entry into force on January 1, 2007); BaFin’s 2006 Annual Report, p. 118 (individual items); BaFin’s 2007 Annual Report, p. 115 f. (institutions are free to use their own internal risk measurement procedures instead of meeting supervisory requirements by way of a predefined liquidity ratio), Deutsche Bundesbank Monthly Report of September 2008, pp. 69 f. (individual provisions; further development of provisions), Deutsche Bundesbank Monthly Report of September 2008, pp. 69 f. (problems; opening clauses), BaFin Annual Report 2009, p. 153 (approval of internal models for institutions).
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University Professor Dr. Gerhard Merk, Dipl.rer.pol., Dipl.rer.oec.
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