The expansion in the range of assets that can be used to meet the new liquidity requirements under Basel III, combined with their slower implementation, is a small positive for the banking sector, but should not have any major economic or market impact. The changes will at least make it easier for some banks to satisfy the requirements when the ample liquidity provided by “quantitative easing” is eventually withdrawn. However, there may be some disappointment (and bemusement) that gold has still not been included in the definition of a high-quality liquid asset.
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