European Banks Pushing Back on Liquidity Rules

New regulations proposed for Eurozone banks would require them to hold more assets in highly liquid forms like cash and high-rated government bonds have generated some pushback from the banks, which claim that the new rules would make it more expensive for them to get their own financing and force them to hold assets like sovereign bonds that could also be risky.

The banks want to be able to include a variety of assets in their liquid reserves, including gold, blue-chip stocks, and even mortgage-backed securities, according to a report in The Wall Street Journal. Some regulators are apparently considering the banks’ view that currently declining values on sovereign bonds hardly makes these assets any sort of protection against a liquidity crisis. One regulator joked that the banks would like to include everything including the office furniture in the liquidity rules.