The Australian Prudential Regulation Authority (“APRA”) has clarified the treatment of high‑quality liquid assets it will apply when implementing the new global liquidity standard announced by the Basel Committee on Banking Supervision (“Basel Committee”) in December 2010. The Basel Committee defines two categories of assets that can be included in this stock: (i) “level 1” assets are limited to cash, central bank reserves and highest‑quality sovereign or quasi‑sovereign marketable instruments that are of undoubted liquidity, even during stressed market conditions; and (ii) “level 2” assets (which can comprise no more than 40 per cent of the total stock) are limited to certain other sovereign or quasi‑sovereign marketable instruments, as well as certain types of corporate bonds and covered bonds, that also have a proven record as a reliable source of liquidity even during stressed market conditions.  Based on its review, APRA has determined that, at this point of time: (i) the only assets that qualify as Level 1 assets are cash, balances held with the Reserve Bank of Australia, and Commonwealth Government and semi‑government securities; and (ii) there are no assets that qualify as Level 2 assets.