LM-A.1.2
Liquidity is the ability of a bank to fund increases in assets and meet obligations as they fall due, without incurring unacceptable losses. Virtually every financial transaction or commitment has implications for a bank's liquidity. Effective liquidity risk management helps ensure a bank's ability to meet cash flow obligations. Liquidity risk management is of paramount importance because a liquidity shortfall at a single institution can have system-wide repercussions.
August 2018