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ECB proposes guides for banks' internal capital, liquidity assessment processes

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ECB proposes guides for banks' internal capital, liquidity assessment processes

The European Central Bank on March 2 launched a consultation on draft guides describing how banks should assess their internal capital and liquidity adequacy.

The ECB said it had identified significant differences in how individual banks assess how much capital and cash they need to hold, citing "a need for improvements at all banks."

Under the draft guides, banks are expected to perform stress tests to identify vulnerabilities. They must also clearly show how their internal capital and liquidity are available to cover risks and ensure continuity in their operations.

The consultation will run until May 4. The ECB intends to start using the guides from 2019 when assessing the internal capital and liquidity assessment processes of banks it supervises.