As a result, these bond holdings are not contributing to the liquidity of the market. Hence, a more relevant metric in considering the share of the government bond market that banks can hold to meet the LCR is the stock of bonds held by domestic investors.
Last week, the RBA published its latest assessment of the amount of AGS and semis that could be reasonably held by the domestic banks without impairing market functioning. 6 (APRA then sets the aggregate size of the Committed Liquidity Facility as the difference between the LCR requirements of the banks and the amount of AGS and semis that can be reasonably held.)