Although the treatment of such bonds is not explicitly mentioned in the Basel LCR rules text, under the Basel capital framework, securities issued by regional governments/local authorities qualify for the same treatment as claims on their sovereign or central government if these governments and local authorities have specific revenue raising powers and have specific institutional arrangements the effect of which is to reduce their risk of default.
•  The Basel standard allows residential mortgage-backed securities and corporate debt securities (including commercial paper) that satisfy certain conditions as Level 2B assets. We have not allowed this as yet because we have to make sure that the underlying conditions are met.