assets are limited to the following : ( a ) marketable securities representing claims on or guaranteed by sovereigns, central banks, pses or multilateral development banks that satisfying certain conditions such as 20 percent risk weight under the basel ii standardised approach, traded in large, deep and active repo or cash markets characterised by a low level of concentration ; bis central bankers ’ speeches ( b ) corporate ( non - financial ) debt securities ( including commercial paper ) and covered bonds that satisfy certain conditions around a satisfactory credit rating and traded in large, deep and active repo or cash markets characterised by a low level of concentration ; level 2b assets are limited to the following : residential mortgage backed securities ( rmbs ) that satisfy certain conditions. 2. corporate ( non - financial ) debt securities ( including commercial paper ) that satisfy certain conditions including a minimum credit rating 3. common ( non - financial ) equity shares that satisfy certain conditions such as being exchange traded and centrally cleared, denominated in domestic currency and traded in deep markets. reserve bank of new zealand mismatch ratio the reserve bank ’ s mismatch ratio is akin to the lcr, although it is not compliant with basel iii requirements. all new zealand incorporated registered banks are subject to minimum oneweek and one - month mismatch ratios. the aim of the mismatch ratios is to reduce the risk that an individual bank is brought down by a short - term loss of confidence. one - week mismatch ratio one - month mismatch ratio primary liquid assets contain the following classes of assets : 1. esas balances with the rbnz 2. nzd currency demand balances with other nz banks 3. foreign currency notes and coins held by the bank, and foreign currency demand balances held with overseas banks, subject to a haircut ; 4. nz government securities denominated in nzd 5. other securities with haircuts : 1. high rated local authority securities 2. high rated state owned enterprise securities. 3. high rated kauris, 4. high rated two - name and single - name rmbs secondary liquid assets have larger haircuts and contain the following classes of assets : 1. local and foreign government guaranteed securities 2. lower rated local authority securities 3. lower rated corporate securities 4. asset back securities 5. registered bank securities bis central bankers ’ speeches reserve bank of new zealand core funding ratio the reserve bank ’ s mismatch ratio is akin to the nsfr. the

view to increasing funding resilience and average funding costs in the upturn, and taking pressure off funding costs in the downturn. i will come back to this a bit later in the context of the interaction between liquidity standards and monetary policy. central bank liquidity facilities cecchetti and disyatat ( 2009 ) 5 differentiate between three kinds of potential liquidity shortage, relating to central bank cash, the funding of institutions, and the liquidity of key markets. in normal times, the central bank targets a supply of settlement cash consistent with maintaining short term market rates in line with the official policy rate. during the crisis, this approach was insufficient to restore stability. it was also necessary to introduce new funding facilities, and to broaden existing facilities in terms of the counterparties dealt with and the range of assets accepted as collateral. while most of the special funding facilities have been curtailed since the gfc, some countries have found it necessary to maintain direct funding facilities, for example the boe ’ s funding for lending scheme. further, it is probably fair to say that many of the special facilities used during the gfc effectively remain on standby, i. e. they could easily be reactivated in a new crisis situation. many central banks have also retained the broader scope of their mainstream liquidity facilities. examples here include boe, boj, rba, and rbnz. these more permanent changes reflect lessons learned in the gfc about the different dimensions of financial system liquidity. many central banks appear to have broadened their perspective on the “ lender of last resort ” function and what this implies for central bank policies in normal times as well as during a crisis. one aspect of this broader approach is seen in central banks being more explicit about the key markets they will support6. this might involve a prior commitment to directly support particular markets in a crisis, ( eg. the fx market, the interbank market, the short term repo market ). it might also involve an ongoing commitment to accept certain securities as eligible collateral. during the gfc, the market liquidity of debt securities became critically dependent on their collateral eligibility at the central bank. central banks adjusted their credit standards see appendix 2 for definition. cecchetti, stephen g. and disyatat, piti, central bank tools and liquidity shortages ( february 1, 2009 ). economic policy review, vol. 16, no. 1, p. 29, august 2010