bank risks
...-day management of liquidity A bank's board of directors should approve the strategy and significant policies related to the management of liquidity. The board should also ensure that senior management takes the steps necessary to monitor and control liquidity risk. A bank must have adequate information systems for measuring, monitoring, controlling and reporting liquidity risk. A bank should analyse liquidity utilising a variety of "what if" scenarios. Each bank should periodically review its efforts to establish and maintain relationships with liability holders, to maintain the diversification of liabilities, and aim to ensure its capacity to sell assets. A bank should have contingency plans in place that address the strategy for handling liquidity crises and include procedures for making up cash flow shortfalls in emergency situations. Liquidity, or the ability to fund increases in assets and meet obligations as they come due, is crucial to the ongoing viability of any banking organisation. Therefore, managing liquidity is among the most important activities conducted by banks. Sound liquidity management can reduce the probability of serious problems. I since a liquidity shortfall at a single institution can have system-wide repercussions. Recent technological and financial innovations have provided banks with new ways of funding their activities and managing their liquidity. In addition, a declining ability to rely on core deposits, increased reliance on wholesale funds, and recent turmoil in financial markets globally have changed the way banks view liquidity. In particular, good management information ...