THE Monetary Authority will begin a second round of consultation with the banking sector this week over the liquidity requirements. Banks will be given two months to comment on the proposal, with the new scheme likely to be implemented early next year. The revised proposal ''reconciles the conflicting requirements of local and foreign banks'', Monetary Authority deputy chief executive David Carse said. The authority does not anticipate as much opposition to this proposal as the first one got in April. ''Though we are using a uniform framework for all banks, there is more flexibility,'' he said. He said no guidelines were provided on banks' maturity mismatch positions, unlike the initial paper. Instead banks would use their own internal guidelines, to be drawn up in consultation with the authority, he said. He added: ''On back-to-back intra-group transactions, it is argued that large international banks do generate some genuine liquidity through these transactions. ''So we will lay down various conditions before these transactions can be considered as genuine'' and this would be discussed with the banks' home regulators. The conditions state that the transaction must be between the branch and its headquarters and not another overseas branch, that it is properly documented and recorded, and that the home supervisor raises no objection and is overseeing the liquidity position on a global basis. The working group on liquidity discussed the draft on Friday and there was ''no major debate and no controversial point'', acting executive director (banking policy) Choi Yiu-kwan said. Banks will be given time to upgrade their computer programs to output the newly required information on their liquidity and maturity mismatch positions.