Fed rejects muni bonds from US LCR
The US Federal Reserve has decided not to class municipal debt as a high-quality liquid asset, but says some may be included in future subject to certain criteria
Municipal bonds will not be counted towards banks' high-quality liquid assets (HQLA) holdings under the US implementation of the Basel Committee on Banking Supervision's liquidity coverage ratio (LCR), but certain bonds may be included in future subject to certain criteria, the Board of Governors of the Federal Reserve System announced on Wednesday.
"The proposed rulemaking excluded state and municipal bonds from the various categories of high-quality liquid assets (HQLA) that make up the
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