It is still too soon to tighten liquidity standards on banks, the UK’s Financial Services Authority said Monday.

Last October, the FSA published its plans for a more stringent liquidity regime, introducing tougher qualitative and quantitative standards for firms.

However, at that time the FSA said that it “would not tighten quantitative standards before economic recovery is assured given that all firms were experiencing a market-wide stress.” The regulator said that it would update its position in the first quarter of this year.

On Monday, the FSA said it believes “that it would be premature to increase liquidity requirements across the industry at the current time”, adding that this position will be reviewed again later on in the year with a further announcement in the fourth quarter.

“Meanwhile, the FSA is continuing to work with firms that are most affected by the new regime focusing on the steps they are taking to mitigate liquidity risk and on the additional impact of our progressively tightening quantitative requirements,” it said.

IE