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The Precautionary and Liquidity Line (PLL) was introduced in the context of the Board discussion on the Fund's Financing Role: Reform Proposals on Liquidity and Emergency Assistance in November 2011, replacing and broadening the scope of the previously established Precautionary Credit Line (PCL). The following note provides operational guidance to staff and further background information on the PLL. SPR (the Emerging Markets Division), FIN, and LEG stand ready to clarify any further questions that departments may have on the PLL.

Bank liquidity.

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Reviews progress under the Fund's strengthened cooperative strategy on overdue financial obligations and proposes to extend the availability of the rights approach, which expires on August 31, 2005, by another year. The rights approach remains a potentially important element of the intensified collaborative approach for arrears clearance for the three members that remain eligible, Liberia, Somalia, and Sudan.

Bank liquidity.

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Bhutan's growth was resilient to the financial crisis and the outlook remains positive. Containing fiscal expansion and enhancing liquidity management are necessary to avoid economic overheating. Strengthening bank supervision is also a top priority.

Bank liquidity. --- Bank liquidity --- Management.

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Does the bank lending channel of monetary transmission work in Turkey? Using the May- June 2006 financial turbulence as an exogenous shock that prompted a significant tightening of monetary policy, this paper examines the loan supply response of Turkey's banks, depending on their balance sheet characteristics. The empirical results indicate that banks can play a role in Turkey's monetary transmission mechanism. Specifically, bank liquidity is found to have a significant effect on loan supply in Turkey. This suggests that the effect of monetary policy in Turkey can be propagated by the banking sector, depending on its liquidity position.

Banks and Banking --- Finance: General --- Money and Monetary Policy --- Industries: Financial Services --- Monetary Policy, Central Banking, and the Supply of Money and Credit: General --- Banks --- Depository Institutions --- Micro Finance Institutions --- Mortgages --- Portfolio Choice --- Investment Decisions --- Monetary economics --- Banking --- Finance --- Bank credit --- Loans --- Liquidity --- Commercial banks --- Credit --- Banks and banking --- Economics --- Turkey --- Monetary policy --- Bank liquidity --- Bank loans --- Transmission mechanism (Monetary policy)

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Financial sector reforms are being considered to address the risks posed by large and complex financial institutions (LCFIs). The vast majority of global finance is intermediated by a handful of these institutions with growing interconnections within and across borders. Common trends that contributed to the recent global crisis included sharp increases in leverage, significant reliance on short-term wholesale funding, growth of off-balance-sheet activities, maturity mismatches, and increased share of revenues from complex products and trading activities. The key objective of the financial sector reforms is to promote a less leveraged, less risky (or better cushioned), and thus a more resilient financial system that supports strong and sustainable economic growth. The recent proposals of the Basel Committee on Banking Supervision (BCBS) on capital standards represent a substantial improvement in the quantity and quality of capital in comparison with the pre-crisis situation. The analysis of this paper suggests that, subject to usual caveats associated with limited data disclosures and availability, phase-in arrangements will allow most banks to move to these higher standards through earnings retention, assuming a modest economic and earnings outlook. It also suggests that should banks generate strong earnings in the coming years, and distribute lower dividends, they could rebuild common equity capital ratios faster than required under the current phase-in periods. The analysis of the paper also suggests that the new capital standards will have a significant impact on investment-banking-type activities, including through tighter requirements for trading book exposures. Investment banking activities will also be affected by a host of other regulatory initiatives, including the new accounting rules and higher standards for securitization, derivatives, and trading businesses, as well as measures to restrain certain activities. Yet, LCFIs with an investment banking focus have flexible business models and can adjust their strategies easily to mitigate the effects of the regulatory reforms, notwithstanding a multitude of regulations affecting their activities. The ultimate effect of the reforms on business models remains to be seen until the regulations take their final shape.

Financial institutions --- Banks and banking --- Bank capital --- Bank liquidity --- Liquidity (Economics) --- Capital --- State supervision --- E-books --- Banks and Banking --- Financial Crises --- Financial Institutions and Services: Government Policy and Regulation --- Banks --- Depository Institutions --- Micro Finance Institutions --- Mortgages --- Investment Banking --- Venture Capital --- Brokerage --- Ratings and Ratings Agencies --- Banking --- Financial services law & regulation --- Liquidity requirements --- Investment banking --- Commercial banks --- Capital adequacy requirements --- Financial regulation and supervision --- Financial services --- Countercyclical capital buffers --- Asset requirements --- United States