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Jul 17, 2019 · Why do large U.S. banks hold considerable amounts of low-yielding cash, other than to meet liquidity requirements? Our analysis shows that large banks have a long-run desired cash level and they manage their actual cash balances closely to their desired amounts.
Jul 12, 2019 · Liquidity management—ensuring access to sufficient quantities of assets that can be converted easily and quickly into cash with little or no loss of value—has always been a key component of banks' balance sheet management. However, liquidity management has become an even more important consideration in banks' operations in the wake of the ...
Jun 18, 2024 · With the reduction of the Eurosystem’s balance sheet, central bank liquidity is declining. As liquidity is unevenly distributed among banks, an effective redistribution and use of market funding are essential. This worked well so far, with limited recourse to Eurosystem’s refinancing operations.
Aug 21, 2019 · Since 2015, regulators have required certain banks to hold minimum levels of high-quality liquid assets (HQLA) in an attempt to prevent the acute liquidity shortages that precipitated the 2007–08 financial crisis.
Feb 1, 2022 · Greater liquid holdings do not seem to have made markets for liquidity more immune to liquidity shocks. Indeed, markets were disrupted yet again in March 2020 at the onset of the COVID-19 pandemic and the banking system was found short in its ability to accommodate the demand for liquidity.
Jul 11, 2024 · A new working paper she coauthored that was published by the Bank’s Supervisory Research and Analysis group explores how a “shock” to one bank’s liquidity can ripple across a network of firms – especially in times of crisis, such as the COVID-19 pandemic.
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The LCR ensures that banks have enough liquid assets to withstand a short-term liquidity stress scenario. To meet the LCR, banks must hold sufficient stock of unencumbered high-quality liquid assets (HQLAs), such as cash and cash equivalents, to cover net cash outflows during a 30-day liquidity stress scenario ( Equation 1 ).
