Liquidity Risk Management

Liquidity is a financial institution’s capacity to meet its cash and collateral obligations without incurring unacceptable losses. Adequate liquidity is dependent upon the institution’s ability to efficiently meet both expected and unexpected cash flows and collateral needs without adversely affecting either daily operations or the financial condition of the institution. Liquidity risk is the risk to an institution’s financial condition or safety and soundness arising from its inability (whether real or perceived) to meet its contractual obligations. The primary role of liquidity-risk management is to (1) prospectively assess the need for funds to meet obligations and (2) ensure the availability of cash or collateral to fulfill those needs at the appropriate time by coordinating the various sources of funds available to the institution under normal and stressed conditions.

Policy Letters

Liquidity Risk Management

Interagency Guidance on Funds Transfer Pricing Related to Funding and Contingent Liquidity Risks

Supervisory Guidance on Dodd-Frank Act Company-Run Stress Testing for Banking Organizations with Total Consolidated Assets of More Than $10 Billion but Less Than $50 Billion

Supervisory Guidance on Stress Testing for Banking Organizations with More Than $10 Billion in Total Consolidated Assets

Questions and Answers on Interagency Advisory on Interest Rate Risk Management

Guidance on Model Risk Management

Interagency Policy Statement on Funding and Liquidity Risk Management

Interagency Advisory on Interest Rate Risk

Interagency Advisory on the Use of the Federal Reserve's Primary Credit Program in Effective Liquidity Management

Joint Agency Advisory on Rate-Sensitive Deposits

Supervisory Guidance on Complex Wholesale Borrowings

Interagency Guidance on Common Questions About the Application of the Revised CAMELS Rating System

Uniform Financial Institutions Rating System

Joint Policy Statement on Interest Rate Risk

Interpretation of Interagency Statement on Retail Sales of Nondeposit Investment Products

Deposits Held in Foreign Branches of U.S. Banks

Bank Holding Company Funding from Sweep Accounts

Foreign (Non-US) Currency Denominated Deposits Offered At Domestic Depository Institutions

Additional Resources

Manual References

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Last Update: May 19, 2017