Bank Liquidity Rules Update - How Much Cash Must Banks Keep on Hand?

Official title: Draft Liquidity Adequacy Requirements (LAR) Guideline

Closed Regulations & Permits Finance & Consumer
Canada's banking regulator proposed updates to rules that determine how much cash banks must keep available. The changes would create new categories for deposits from non-bank financial companies and for products like structured notes. These technical rules help ensure banks can pay out money when customers need it.

Why This Matters

Ever worry about whether your bank has enough cash if everyone tried to withdraw at once? These rules are the safety net. They're highly technical, but they affect how stable your bank is during a financial crisis.

What Could Change

Banks may need to hold more liquid assets for certain types of deposits. New funding categories would apply to deposits from non-bank financial intermediaries and structured notes. The updated guideline takes effect in 2026.

Key Issues

  • How should deposits from non-bank financial intermediaries be categorized for liquidity purposes?
  • What liquidity treatment should apply to structured notes and similar products?

How to Participate

  1. Review the draft LAR Guideline chapters and the accompanying letter explaining the proposed changes.

What Happened

The consultation closed on July 22, 2025. OSFI has indicated the draft guideline will remain available on the site until the final version is released.

Key Documents