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When we do term repos, we aim to hold fewer government treasury bills, 3 which means that the private sector would hold more. 4 We are injecting liquidity where the system had generated it before, essentially by exchanging less-liquid assets for more liquid ones. Moreover, when we roll over previous operations, as the Bank of Canada has done ...
OSFI Principle #1 (BCBS Principle #1): An institution is responsible for the sound management of liquidity risk. An institution should establish a robust liquidity risk management framework that ensures it maintains sufficient liquidity, including a cushion of unencumbered, high quality liquid assets, to withstand a range of stress events, including those involving the loss or impairment of ...
options: they can sell or redeem unencumbered liquid assets, they can borrow (either from private sources or from the cen-tral bank) on a secured or unsecured basis, or they can access new cash generated from operations. To deal with a long-term liquidity need, banks endeavour to sell less-liquid assets and access more permanent funding through ...
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Oct 1, 2024 · The more stringent liquidity requirements of Option B may offer some resolution benefits, such as allowing more time to carry out a smoother resolution of a troubled institution. But this would likely come at the expense of more costly financial intermediation, due to the need for deposit-taking institutions to carry more liquid assets.
liquid assets will also matter, since some of them may mature before the cash crunch passes, thereby providing an additional source of funds. Or they may be sold, even
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Jul 11, 2024 · The researchers study how a liquidity shock to one bank impacted the liquidity positions of other banks before and during the COVID-19 pandemic. They find that this shock transmission, or “spillover,” was stronger during the COVID-19 period than the pre-pandemic period, on average. They also find that, on average, connections that can ...
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Oct 29, 2014 · We assess the determinants of banks’ liquidity holdings using data for nearly 7000 banks from 25 OECD countries. We highlight the role of several bank-specific, institutional and policy variables in shaping banks’ liquidity risk management. Our main question is whether liquidity regulation neutralizes banks’ incentives to hold liquid assets. Without liquidity regulation, the determinants ...
