Here is a quite wonderful post by Tracy Alloway at FT Alphaville about the Federal Home Loan Banks and the Liquidity Coverage Ratio. The issue, as it always is, is that:
everyone wants banks to be safe, but
everyone wants banks to do banking stuff.
The particular flavor of “safe” here is: Look, the big systemic risk of banks is runs on the bank. The way (a way) to reduce the risk of runs is for banks to just have a bunch of cash lying around. That way, if everyone comes into the bank yelling for their money back, you can just give them their money back.