2018-05-23 National Governors Association

NGA Statement on U.S. Municipal Securities as High-Quality Liquid Assets

NGA Statement on U.S. Municipal Securities as High-Quality Liquid Assets

The National Governors Association today released the following statement in reaction to Congress’ support in treating U.S. Municipal Securities as High-Quality Liquid Assets.

WASHINGTON- The nation’s governors applaud Congress for directing federal regulators to classify all investment-grade, liquid and readily marketable municipal securities as High Quality Liquid Assets (HQLA).

For several years now, federal regulators could not credit municipal securities held in portfolios by institutional investors as available for sale to raise capital if they faced a liquidity challenge.  The HQLA provision in the Act brings important change.

Continued exclusion from HQLA eligibility threatened to dampen investor interest in municipal securities generally, and risked higher interest costs paid by state and local governments. Municipal bonds are a vital tool for state and local governments to finance and build the infrastructure that contributes to a strong economy.

By classifying certain municipal securities as HQLA, Congress has ensured low-cost infrastructure financing remains available for state and local governments to continue to finance critical public infrastructure projects.

Governors appreciate that Congress has recognized the strength, integrity and value of municipal securities and we look forward to continuing to work with Congress to build our nation’s infrastructure.

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