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Board of Governors of the Federal Reserve System
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Board of Governors of the Federal Reserve System

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.
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Policy Letters

Liquidity Risk Management

SR 12-7
Supervisory Guidance on Stress Testing for Banking Organizations with More Than $10 Billion in Total Consolidated Assets
SR 12-2
Questions and Answers on Interagency Advisory on Interest Rate Risk Management
SR 11-7
Guidance on Model Risk Management
SR 10-6
Interagency Policy Statement on Funding and Liquidity Risk Management
SR 10-1
Interagency Advisory on Interest Rate Risk
SR 03-15
Interagency Advisory on the Use of the Federal Reserve's Primary Credit Program in Effective Liquidity Management
SR 01-14 (SUP)
Joint Agency Advisory on Rate-Sensitive Deposits
SR 01-8 (SUP)
Supervisory Guidance on Complex Wholesale Borrowings
SR 97-4 (SUP)
Interagency Guidance on Common Questions About the Application of the Revised CAMELS Rating System
SR 96-38 (SUP)
Uniform Financial Institutions Rating System
SR 96-13 (SUP)
Joint Policy Statement on Interest Rate Risk
SR 95-46 (SPE)
Interpretation of Interagency Statement on Retail Sales of Nondeposit Investment Products
SR 95-39 (SUP)
Examination Procedures for the New "Pass-Through" Deposit Insurance Disclosure Rules Concerning Employee Benefit Plan Deposits
SR 94-49 (IB)
Deposits Held in Foreign Branches of U.S. Banks
SR 91-31
Guidance to Foreign Banks in Complying with New Deposit-Taking Restrictions
SR 90-31
Bank Holding Company Funding from Sweep Accounts
SR 90-3
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 Leaving the Board (September 2008)  

Manual References

Last update: March 21, 2013