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Don’t let rate worries hide liquidity risks  

March 24, 2014
Joe Kennerson, ABA Banking Journal

Focus in asset-liability management centers on interest rate risk (IRR), as the banking industry composes its playbook for rising rates. The Fed’s announcement about rates this week merely put more urgency into that focus.

Yet that concentration on interest rate risk, in conjunction with the current abundance of liquidity flowing through the system, may be overshadowing the importance of developing a strong contingency funding plan.

The result could be an unconscious move of liquidity management to the back of the rising rate playbook—as far as the appendix.

Not so fast.

The next rate cycle will impact liquidity as well as rate risk.

Read more: ABA Banking Journal


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