The subprime lending meltdown in 2008 made the banks and regulators realize the importance of liquidity risk management in banks. Which of the following institution provides a framework to deal with this risk?

Solution

Under the aegis of Bank for International Settlements (BIS), a voluntary committee known as the Basel Committee on Banking Supervision (BCBS) was established in 1974 that provides a forum for  regular cooperation on banking supervisory matters with a goal to ensure financial stability and common standards of banking regulation. The committee released the BASEL III norms in response to the subprime crisis that led to liquidity risk in banks across the globe. The committee also provides framework for various risks in banks like credit risk, market risk, funding risk, operational risk, etc.