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FIGCovered Bonds

Covered bonds face 15% haircuts in Basel III’s Level 2

Covered bonds have been deemed eligible for new regulatory liquidity buffers, albeit subject to 15% haircuts and other restrictions, under an agreement reached by the oversight body of the Basel Committee on Banking Supervision yesterday (Monday). This, alongside delays and changes to the envisaged Net Stable Funding Ratio, could impact demand for and supply of covered bonds.

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