Liquidity risk, implicitly covered in Pillar 2 under Basel II, is a stand-alone risk requirement under Basel III. The liquidity risk is addressed by the introduction of the Liquidity Coverage Ratio, which would provide banks with enough high-quality liquidity instruments for 30-days in the event of stressed conditions, and the Net Stable Funding Ratio for stressed liquidity conditions of up to one year.
As studies by the Bundesbank and the German Council of Economic Experts have clearly shown16, in addition to the explicit government debt on which the public debate is focused, the impact of implicit promises of future state benefits from the social security systems should not be overlooked.