Liquidity Coverage Ratio and Peak demand: Difference between pages

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imported>Doug Williamson
(Create the page. Source: The Treasurer, March 2017, p15.)
 
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''Bank regulation''
The maximum global total demand for oil and gas.


(LCR).
Total demand has not yet been reached.


The LCR is a requirement under Basel III for a bank to hold high-quality liquid assets (HQLAs) sufficient to cover 100% of its stressed net cash requirements over 30 days.


<span style="color:#4B0082">''''''Peak demand' new worry for fossil fuel producers'''''</span>


The LCR is calculated as:
:"Remember 'peak oil'? ...


LCR = HQLAs / Net cash outflows
:It never happened. In the event, more and more oil and gas keeps being discovered...


:This has given rise to a new worry for fossil-fuel producers - 'peak demand'. Already, demand for hydrocarbons in advanced economies is beginning to fall. Rising use in the developing world ensures that, overall, global consumption should continue to grow for some years to come yet, but the peak may be much closer than generally appreciated...


The purpose of this requirement is to ensure that banks can manage stressed market conditions, under which the bank is assumed to suffer substantial outflows of the cash previously deposited with it.
:Renewables are very unlikely to replace hydrocarbons entirely... But we could be looking at a much swifter decline than generally imagined, with big implications for the price of oil and, therefore, the future of its main producers."


The LCR applies throughout the European Union.


 
:''The Treasurer magazine, March 2017, p15 - Jeremy Warner, assistant editor of The Daily Telegraph.''
It reduces the value to a bank of cash deposits of less than 30 days tenor, because they are only worth the income on the HQLAs if a bank forecasts no short term cash receipts to cover repayment.  




== See also ==
== See also ==
* [[Basel III]]
* [[Hydrocarbons]]
* [[Cash investing in a new world]]
* [[OPEC]]
* [[European Union]]
* [[Peak oil]]
* [[High Quality Liquid Assets]]  (HQLAs)
* [[Renewables]]
* [[Level 1 liquid assets]]
* [[Level 2 liquid assets]]
* [[Leverage Ratio]]
* [[Liquidity buffer]]
* [[Liquidity risk]]
* [[Net Stable Funding Ratio]]  (NSFR)
* [[Overall Liquidity Adequacy Rule]]  (OLAR)
* [[Pillar 1]]
* [[Required Stable Funding]]
* [[Stress]]
* [[Survival period]]
 
[[Category:Compliance_and_audit]]
[[Category:Liquidity_management]]

Revision as of 13:13, 13 March 2017

The maximum global total demand for oil and gas.

Total demand has not yet been reached.


'Peak demand' new worry for fossil fuel producers

"Remember 'peak oil'? ...
It never happened. In the event, more and more oil and gas keeps being discovered...
This has given rise to a new worry for fossil-fuel producers - 'peak demand'. Already, demand for hydrocarbons in advanced economies is beginning to fall. Rising use in the developing world ensures that, overall, global consumption should continue to grow for some years to come yet, but the peak may be much closer than generally appreciated...
Renewables are very unlikely to replace hydrocarbons entirely... But we could be looking at a much swifter decline than generally imagined, with big implications for the price of oil and, therefore, the future of its main producers."


The Treasurer magazine, March 2017, p15 - Jeremy Warner, assistant editor of The Daily Telegraph.


See also

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