Banking regulator urges commercial banks to take quarterly stress tests

China Banking Regulatory Commission (CBRC) has required the country's commercial banks to take quarterly stress tests in order to avoid possible liquidity risks, reported the China Security News on October 23. The commercial banks will also have to present liquidity management reports every year to the banking regulator.

Commercial banks should rate their own liquidity risk-bearing capability and establish risk strategy based on operations strategy, business characteristic, as well as risk appetite, said the Guidelines to Commercial Banks' Liquidity Risk Management released by the CBRC. The CBRC also urged the banks to apply the diversification principle in their asset-liability management.

Liu Mingkang, the CBRC chairman, has emphasized that China's commercial banks must establish their liquidity risk management mechanism as soon as possible and pay close attention to the possible impact of international capital flows, economic trend and policy adjustment. "The banks should maintain adequate liquidity and arrange long- and short-term loans wisely," said Liu.

By People's Daily Online