OTTAWA, Dec. 5, 2019 /CNW/ - Today the Office of the Superintendent of Financial Institutions (OSFI) released the final version of Guideline B-6: Liquidity Principles, which sets out OSFI's expectations for how deposit-taking institutions (DTIs) should manage liquidity risk.
OSFI last revised Guideline B-6 in 2012. Since then, market practices have evolved and the complexity of both measuring and managing liquidity risk has increased. Through its supervisory work and assessments of liquidity risk practices, OSFI identified areas of the guideline that required revisions.
The final guideline provides DTIs with further clarity on how to manage liquidity risk and ensures that OSFI's expectations are current and appropriate for the scale and complexity of these institutions.
The final guideline will take effect January 1, 2020.
"It is important for institutions to prudently manage their liquidity. By updating Guideline B-6, we ensure that OSFI's expectations remain relevant and continue to contribute to the overall resilience of deposit-taking institutions and the Canadian banking sector as a whole."
— Ben Gully, Assistant Superintendent, Regulation Sector.
- Guideline B-6 complements the Liquidity Adequacy Requirements (LAR) Guideline. LAR outlines how OSFI assesses if institutions are holding sufficient liquidity.
- Liquidity refers to an institution's capacity to generate or obtain sufficient cash — or its equivalent — when needed and at a reasonable price.
- Liquidity risk is the potential for institutions to incur losses from holding insufficient liquidity.
The Office of the Superintendent of Financial Institutions (OSFI) is an independent agency of the Government of Canada, established in 1987, to protect depositors, policyholders, financial institution creditors and pension plan members, while allowing financial institutions to compete and take reasonable risks.
SOURCE Office of the Superintendent of Financial Institutions
For further information: OSFI - Public Affairs, [email protected], 343-550-9373