Managing liquidity risk, one of the types of risk most affected by the financial crisis, has become an important strategic and tactical topic for banks and regulators. With the introduction of the liquidity standards by the Basel committee in 2010 and the mandatory liquidity rules by the US Federal Reserve System in 2013, banks face a number of new challenges when it comes to their Liquidity Coverage Ratio (LCR).
We recommend that banks categorize and deal with these challenges in four distinct phases:
Interpret regulators’ rules and intentions.
Perform a gap assessment of the bank’s client data, tools, processes and controls.
Implement the calculations.
Embed the LCR concept into liquidity management.
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