A speech by Guy Debelle, Reserve Bank Assistant Governor (Financial Markets) gives helpful background on the committed liquidity facility that will be part of the Basel III reforms.

ADI’s will be required to have a committed liquidity facility to be provided by the Reserve Bank against eligible collateral to enable them to meet the Liquidity Coverage Ratio.

The Reserve Bank has set a fee of 15 basis points in return for its commitment to provide liquidity under the CLF. The fee will be paid on both the drawn and undrawn amount.

Should an ADI need to obtain liquidity under the facility, it will undertake a repo with the Reserve Bank using its eligible collateral and pay an interest rate on the repo of 25 basis points above the Reserve Bank Board’s target for the cash rate. This is the same as the current arrangements for the RBA’s overnight repo facility. This 25 basis points charge will be in addition to the ongoing access fee of 15 basis points.