In doing so, we should ensure that this is done prudently and, as far as possible, in a “market-friendly” manner in order to avoid any unnecessary administrative burdens. The new German Liquidity Regulation, which came into effect on 1 January 2007, is one example of such “market-friendly” regulation.
This gives credit institutions, for the first time, the option of using  BIS Review 33/2007  1  their own internal liquidity risk measurement and management systems in order to limit liquidity risk for prudential purposes. Such internal procedures need to meet certain requirements, compliance with which is assessed by supervisors in an approval examination.