Section 2-32 Liquidity requirements

The mortgage credit institution shall ensure that the payment flows from the cover pool enable the mortgage credit institution to honour its payment obligations towards holders of covered bonds and counterparties to derivative contracts as mentioned in section 2-28 first paragraph e) at any and all times. The mortgage credit institution may enter into interest rate and foreign exchange contracts in order to meet this requirement.

The mortgage credit institution shall establish a liquidity reserve to be included in the cover pool as substitute assets. The King may in regulations lay down further rules on liquidity reserves, including rules on permitted divergence between future receipts and payments and permitted divergence between the redemption conditions for covered bonds and for assets included in the cover pool assigned to such bonds. The King may in regulations lay down rules on permitted interest rate and foreign currency risk and on the right to enter into interest rate and foreign currency contracts.