• General Market Stress Scenarios

    • LM-9.2.8

      A general market stress scenario is one where liquidity, at a large number of financial institutions in one or more markets, is affected. Characteristics of this scenario may include:

      (a) A market-wide liquidity squeeze, with severe contraction in the availability of secured and unsecured funding sources, and a simultaneous drying up of market liquidity in some previously high liquidity markets;
      (b) Substantial discounts needed to sell or repo assets and wide differences in funding access among banks, due to the occurrence of a severe tearing of their perceived credit quality (i.e. flight to quality);
      (c) Restrictions on currency convertibility; and
      (d) Severe operational or settlement disruptions affecting one or more payment or settlement systems.
      August 2018