At 5 pm Swiss time on Jan 6th, the final draft of the Liquidity Coverage Ration will be unveiled and due for implementation in 2015.
With this, banks will have to hold sufficient liquidity to cover 30 days of acute stress, when value of assets would have shrunk far below normal market value, ability to repo finance would have evaporated and deposits will disappear.
A $40 bn liquidity buffer was not sufficient to hold up Lehman Brothers. How much will be sufficient to hold up the surviving banks? How much money can we leave under the mattress to prepare for a stress scenario? As always the devil will be in the details.
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