Supervisory Policy and Guidance Topics
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 ManagementFederal Financial Institutions Examination Council Issues Joint Statement on Managing the LIBOR Transition
Questions and Answers (Q&As) on Statement Regarding the Use of Capital and Liquidity Buffers
Frequently Asked Questions on the Tailoring Rules
Interagency Frequently Asked Questions on Implementation of the Liquidity Coverage Ratio (LCR) Rule
Interagency Guidance on Funds Transfer Pricing Related to Funding and Contingent Liquidity Risks
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
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
- Basel Committee on Banking Supervision – Principles for Sound Liquidity Risk Management and Supervision
(September 2008) - Liquidity Coverage Ratio: Frequently Asked Questions
- Regulation WW: Liquidity Risk Measurement Standards
Manual References
- Bank Holding Company Supervision Manual
- Section 2080.0, "Funding (Introduction)"
- Section 2080.05, "Bank Holding Company Funding and Liquidity"
- Section 4010.0, "Parent Only (Debt Servicing Capacity-Cash Flow)"
- Section 4020.4, "Banks: Liquidity"
- Commercial Bank Examination Manual
- Section 3000.1, "Deposit Accounts"
- Section 4020.1, "Liquidity Risk"
- Trading and Capital Markets Activities Manual
- Section 3005.1, "Liquidity Risk"