Part of the reason is that a strong capital base and a liquid balance sheet--HSBC has one of the strongest Tier 1 ratios out of the big banks--is something the company has never parted from, Green says.

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Also a liquid currency and a strong balance sheet are a competitive advantage.

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The ECB is giving banks cover to pretend their balance sheets are liquid enough to extend financing for desperately needed Euro growth.

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Balance sheets are comfortably liquid and industry shows no appetite for ambitious capital spending.

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And, as a matter of definition, when central banks expand their respective balance sheets they create liquid assets for commercial banks.

BBC: Banks agree minimum liquidity rules

Corporate balance sheets have never been more liquid, and cash flow rests far above capital spending.

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Raymond Greaves, an analyst with Merrill Lynch, has calculated that, in March, there were around euro4 billion of net prepayments on the liability side of Alstom's balance sheet for which he cannot clearly identify liquid assets.

ECONOMIST: Alstom

This rule (which went into effect near the 2007 market top and was suspended near the 2009 bottom) vastly magnified subprime mortgage weakness, effectively forcing banks into near self-perpetuating rounds of asset writedowns, putting pressure on bank balance sheets until they had to sell more liquid assets to meet capital requirements.

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