##a. access fee the reserve bank has set a fee of 15 basis points in return for its commitment to provide liquidity to a bank under the clf. the fee will be paid on both the drawn and undrawn amount. the general motivation in determining the price of the reserve bank ’ s commitment was to replicate the effect in other jurisdictions where a bank could meet its liquidity needs of holding eligible assets in a liquid market, solely through holding government paper. hence the yield differentials between government bonds and the assets that will be eligible for the facility is a logical starting point. 2 however, the spreads on the eligible securities incorporate compensation for a variety of risks, including credit and liquidity. it is only the latter risk that the facility is addressing and hence the banks should be charged only for the liquidity access. importantly, the reserve bank will not be offering any credit protection on these assets and so the banks should be able to retain the compensation for holding these riskier assets. the reserve bank is protected as it provides the liquidity to an institution under a repo with appropriate margining ( see below ). while at times like the present, liquidity can have considerable value, the reserve bank will not be varying the size of the fee through the cycle. consequently, the facility is to be priced at a level that takes into account the value of liquidity in more normal conditions, as well as in stressed circumstances. from the history of the reserve bank ’ s own market operations, we can look at repo rates on some of the eligible securities to try and gauge how much a one month liquidity premium might be worth. the answer is not very much in normal circumstances, generally less than 10 basis points. moreover, when you take into account the fact that to access the facility, an institution has to pay a penalty rate and, in most cases, with greater haircuts than previously applied, a “ market - based ” valuation from historical rates would imply a low fee. however, part of the point of the new liquidity regulations is to recognise that the market has underpriced liquidity in the past. consequently, it is appropriate to levy a fee which is greater than implied by a long run of historical data. the net outcome is thus a weighted average of a one complication in doing this calculation in australia is that because government paper has been in short supply for many years, it has tended to trade with a scarcity premium. this widens the ob

sabine lautenschlager : the banking sector - where did we end up after all the reforms? opening statement by ms sabine lautenschlager, member of the executive board of the european central bank and vice - chair of the supervisory board of the european central bank, to panel 1 " after all the reforms : where did we end up? " at the 6th frankfurt conference on financial market policy : " european financial markets – too much variety? ", frankfurt am main, 14 december 2018. * * * it ’ s often said that in every crisis there is an opportunity. and in the case of the financial crisis, i think that regulators have seized that opportunity. the crisis prompted an overhaul of banking regulation. and it did so not just at the national or european level. through the g20 and the basel committee on banking supervision, the reforms became a common project at the global level. so what was the general idea behind these reforms? the primary aim was to address specific issues that had been laid bare by the crisis. this was the first step. but regulators knew, of course, that the latest crisis is never a blueprint for the next one. the next crisis might come in a completely different form. so the second step was to enhance the general resilience of banks, to make them strong enough to withstand any type of storm. this idea underpins the three main building blocks of the reforms : capital, liquidity and governance. and much has been done on all three fronts. banks not only have to hold more capital than they did before the crisis ; their capital also needs to be of higher quality. banks can therefore suffer more losses before they actually fail. at the same time, banks have to fulfil much stricter liquidity standards than before, providing them with a cushion in case trust evaporates and funding dries up. this allows banks to survive such a situation for longer than in the past. reforms to improve governance and risk management have also come about, but these have received less attention. for too long, governance and risk management have taken a backseat in public or academic debates. but they are just as important as capital and liquidity – if not more important. after all, good governance and sound risk management help to prevent a bank from getting into trouble in the first place. capital and liquidity are merely backstops for bad management – or bad luck. new rules help banks to set up appropriate processes and integrate them into their organisational