The fundamental role of banks in the maturity transformation of short-term deposits into long-term loans makes banks inherently vulnerable to liquidity risk. Banks need liquidity to fund the growth of assets and to meet obligations as they come due, without incurring unacceptable losses. Covid-19 drove home the importance of liquidity to the proper functioning of the banking sector.
Banks have to demonstrate an overall Liquidity adequacy, meaning that they have sufficient liquidity to function in business as usual and to survive liquidity stresses.
This workshop focuses on Liquidity Risk measurement and management. The focus is to explore the potential usefulness and construction of more generalized measures of liquidity adequacy produced using stress-testing techniques, Internal Adequacy Assessment Process (ILAAP), Basel III Global Liquidity standards (LCR & NSFR) and other Liquidity risk management metrics.
On completion of this workshop, participants will be able to:
1. Understand key liquidity risk concepts and how they affect a bank’s liquidity risk profile.
2.Explain how banks manage liquidity under stressed conditions.
3.Present the objectives and the structure of the two liquidity standards – Liquidity Coverage Ratio (LCR) and Net Stable