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Banks may soon face higher costs thanks to the implementation of new liquidity rules, according to the Australian Prudential Regulation Authority (APRA).
Earlier this month APRA proposed some changes to the liquidity rules currently governing the industry after saying the existing rules were insufficient.
APRA executive general manager of policy, Charles Littrell, told a Senate estimates hearing yesterday the banks would have to develop new systems and reorganise their balance sheets to comply with the liquidity proposals.
Under the new proposals, banks could be forced to increase the number of liquid assets they hold as protection against short term loss of access to global capital markets.
They would have to have enough liquid assets to survive on their own for a month, rather than one week as it is currently stipulated.
Moreover, bank bills and mortgage backed securities would no longer qualify as liquid assets, only high quality assets such as government bonds would qualify.
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