Financial Repression Tracker

Rules that steer savings into government debt or hold returns below inflation, country by country.

Steer · Prudential sovereign bias

Liquidity Coverage Ratio Level 1 treatment of government bonds

What it is
Liquidity rules count government securities as top-tier high-quality liquid assets (Level 1) without haircut or cap, while most private assets are capped or haircut.
Why it counts
Banks needing a liquidity buffer are pushed to hold large, permanent stocks of sovereign paper, creating structural captive demand.

When it was in force

  • International: 2015 → now, in force
  • European Union: 2015 → now, in force
  • United States: 2014 → now, in force; the rule may be older than the cited document

3 examples

  1. International

    2015 → nowIn force

    Level 1 HQLA, including marketable sovereign securities, can make up an unlimited share of the buffer with no haircut.

    Basel Committee, Basel III: The Liquidity Coverage Ratio and liquidity risk monitoring tools (January 2013), paras 49-50Primary source
    “Level 1 assets can comprise an unlimited share of the pool and are not subject to a haircut under the LCR.”

    bis.org (opens in a new tab)Checked: quote matched on the page by script

  2. European Union

    2015 → nowIn force

    Claims on or guaranteed by the central government of any Member State qualify as Level 1 assets.

    Commission Delegated Regulation (EU) 2015/61, Article 10(1)(c)Primary source
    “(c) assets representing claims on or guaranteed by the following central or regional governments, local authorities or public sector entities: (i) the central government of a Member State;”

    eur-lex.europa.eu (opens in a new tab)Checked: quote matched on the page by script

    European Union today: index 44.0

  3. United States

    2014 → nowIn force

    The rule may be older than the cited document

    US Treasury securities are listed as level 1 liquid assets alongside Reserve Bank balances.

    12 CFR 249.20(a) (Regulation WW, high-quality liquid asset criteria)Secondary source
    “(3) A security that is issued by, or unconditionally guaranteed as to the timely payment of principal and interest by, the U.S. Department of the Treasury;”

    law.cornell.edu (opens in a new tab)Checked: quote matched on the page by script

    United States today: index 42.9

Examples and their dates reviewed .

Further reading