(4)Only freely transferable assets that can be converted quickly into cash in private markets within a short timeframe and without significant loss in value should be defined as ‘liquid assets’ for the purposes of credit institutions' liquidity buffers. Consistent with Part Six of Regulation (EU) No 575/2013 and the BCBS classification of liquid assets, appropriate rules should differentiate between assets of extremely high liquidity and credit quality or level 1 assets, and assets of high liquidity and credit quality or level 2 assets. The latter should be further divided into level 2A and 2B assets. Credit institutions should hold an adequately diversified buffer of liquid assets, having regard to their relative liquidity and credit quality. Accordingly, each level and sub-level should be subject to specific requirements on haircuts and limits of the overall buffer and, where appropriate, differentiated requirements should be applied between levels or sub-levels and between categories of liquid assets in the same level or sub-level, which should be more stringent the lower their liquidity classification.