Dealing with new liquidity rules The new Basel III liquidity requirements have been criticised in some quarters. Understanding them, and the framework that has been put in place to ensure stability, requires a little new understanding Liquidity risk has been studied for a long time. Gap analysis, for example, goes back more than 50 years. Many different ratios and indices have also been used in time, without any of them having been set as an industry standard. Liquidity is one of the most difficult risks to measure because of its complexity. Almost three years ago, in December 2009, the Basel III international framework for liquidity risk measurement was introduced, including new liquidity and leverage ratios meant to become standard benchmarks. Although during this period much of the implied disaggregation has been completed by banks and regulators of many countries, there is still a long way to go, and many problems yet to solve. The inclusion of two new liquidity ratios within Basel III has been the cause of some criticism, that ranges from arguing that banks are the natural transformation agents of terms and that liquidity gaps cannot be fully matched, to questioning the credit constrains that these measures could imply, or the economic impact of making long-term financing more difficult to concede, and rising the price of it. This might increase capital requirements, and restrict loans to some economic sectors, changing the role that banks play in the economy and passing some of the risks they take on to