LM-10.2.2
Banks must analyse the viability and likely impact on market perception of adopting different contingency funding measures. Some of the factors that must be considered include:
(a) The impact of stressed market conditions on a bank's ability to raise funding through different sources;
(b) The interaction between asset markets and funding liquidity, especially in situations where there is an extensive or complete loss of typically available market funding options;
(c) Any second-round effects, as well as reputation, legal, regulatory and operational constraints, related to the execution of such measures; and
(d) Any peculiarities (including special terms and conditions) associated with particular funding sources. For example, banks must generally refrain from excessive reliance on back-up credit lines (even if committed) and need to understand various conditions, such as notice periods, that could affect a bank's ability to access such lines quickly.
August 2018