Page 45 - Monocle Quarterly Journal Vol 1 Issue 1 Q4

lIquIdIty At RISK: A meASuRemeNt AppRoAch wIthIN BANKING INStItutIoNS
What that does is make it possible to assess the maximum possible liquidity shortfall over a one year period, as well as at di erent points through the one year period, given that interbank activity has been held constant. It may even serve to mitigate against the probability of a severe funding shortfall arising in the rst place.
e LaR framework, essentially, is about bespoke models, methods, and techniques that assist banks in managing their liquidity risk. So that we may be able to predict, anticipate and prepare for the next time we’re in an extreme market crisis; instead of fumbling around desperate for liquidity, wondering why we didn’t see it coming.
“ e LaR framework, essentially, is about bespoke models, methods, and techniques that assist banks in managing their liquidity risk.”
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