##rage and race to the bottom behaviors. • they include requirements and guidance for fmis to implement their own viable recovery and orderly wind - down plans. as i see it, great progress has been made, but there is more work to do in a number of areas : • greater harmonization and better cross - border mutual recognition practices ; • ccp recovery and resilience as well as coordination with other authorities to ensure incentives are aligned ; • appropriate incentives for ccps so that the profit motive does not conflict with having a safe system that can absorb large shocks without destabilizing the financial system ; and • availability of data in trs on a cross - border basis to facilitate the development of a more complete picture of market activities and emerging risks. i am very fortunate to have had the opportunity to chair the committee during the period in which the pfmi were created. i recognize that this was just an initial step in the process, but it was an essential first step. subsequent cpmi committees, under the leadership of paul tucker and benoit coeure, have been working with the other basel committees, the financial stability board ( fsb ), iosco and individual country regulators to continue to take this effort forward. we have placed a lot of financial stability eggs in the fmi basket. it is important that we monitor and oversee that basket carefully. i would now like to turn the floor over to our first panelist, claudio borio. claudio, the floor is yours, you have 10 minutes. shari bower, caren cox, alex merle - huet, john rutigliano, johanna schwab, larry sweet and joseph tracy assisted in preparing these remarks. bis central bankers ’ speeches

speech the committed liquidity facility christopher kent [ * ] assistant governor ( financial markets ) address to bloomberg sydney – 23 july 2019 i'd like to thank bloomberg for the opportunity to speak to you about the committed liquidity facility ( clf ). the clf has been in place now for almost five years. as we announced in june, after a careful review, the rba will be adjusting the settings of the clf starting from next year. [ 1 ] today, i thought it would be helpful to discuss the developments that have led us to make these adjustments. we have also published a detailed article on this on the rba's website. [ 2 ] but first, let's review why we needed the clf in the first place. why do we need a clf? the global financial crisis highlighted how important it is for banks to manage their liquidity risk. during the crisis, many banks overseas faced significant liquidity problems having not paid enough attention to their liquidity management in the lead up to the crisis. following this experience, the basel committee on banking supervision proposed tougher liquidity requirements as part of its broader package of reforms, known as the basel iii regulations. these changes have made the banking system more resilient to periods of financial market stress. one of the key planks of the requirement to increase liquidity of the banks was the introduction of the liquidity coverage ratio ( lcr ). the lcr requires banks to have enough high - quality liquid assets ( hqla ) to cover their estimated net cash outflows during a scenario that entails a 30 - day period of stress. the idea is that a bank experiencing stress will have enough liquid assets that they can use to meet their short - term liquidity needs. in this way, each bank holds a sufficient amount of hqla as self - insurance against liquidity risk. like all insurance, this comes at a cost. in this case, the cost to each bank is incurred because the hqla earn a lower yield than alternative, less liquid assets that the bank could otherwise hold, such as mortgages or business loans. for hqla securities to be of sufficient quality and liquidity, they should be both low risk and actively traded in markets. in australia's case, australian government securities ( ags ) and securities issued by the state and territory borrowing authorities ( semis ) meet this test. in contrast, there is relatively little trading in other australian dollar securities, such as