Bank Policy Institute Advocates for Broader Liquidity Recognition and Clearer Stablecoin Rules

The Bank Policy Institute (BPI) has released an analysis suggesting that including liquidity available for purchase from the central bank, such as discount window borrowing capacity, in the liquidity coverage ratio (LCR) would enhance financial stability and credit availability. Currently, the LCR only recognizes stored liquidity like Treasuries or cash. BPI also urged the Treasury Department to implement safeguards against the evasion of stablecoin rules, expressing concerns about the ambiguity in defining permissible yield arrangements for stablecoin issuers, which could pose risks to the banking system.