Intraday liquidity management and reporting: How to meet the challenges
Abstract
Until recently, intraday liquidity was not a real issue for banks. Nor was it a serious topic on the regulatory agenda. There were no standard monitoring or liquidity management measures in place to give direction around intraday liquidity risk. This fundamentally changed with the financial crisis of 2008. Since then it has become clear that market stress can have an immediate and significant impact on liquidity in real time. Furthermore, regulatory initiatives will force banks to manage their liquidity more efficiently throughout the day in order to lower intraday liquidity risk. Whereas previously their processes were based on end-of-day forecasts, banks now have to consider their liquidity balances on an intraday basis. This requires banks to get greater visibility on liquidity during the day. To be compliant with the new requirements they should design an overall intraday liquidity management framework and build the necessary monitoring and reporting infrastructures. This paper will tackle issues such as improving the visibility of intraday balances in order to optimise liquidity buffers, enhance risk management and allow accurate reporting to regulators; the main challenges faced by regulatory requirements; and the problems and complexity in devising an all-compassing intraday liquidity framework.
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Author's Biography
Carlo R. W. De Meijer is Economist and Senior Researcher for Market Engagement at Royal Bank of Scotland. He has a Master’s degree in International Economics from the University of Tilburg (1977). During his career, Carlo has held various positions, both as a senior economist and private investment advisor. He has published many papers on various economic and financial topics, especially related to international financial markets and to European financial and monetary integration.
Ludy Limburg is a vice president in the international cash management (ICM) financial institutions product team at Royal Bank of Scotland (RBS), focusing on EURO payment solutions, continuous linked settlement (CLS) and intraday liquidity developments. Before that he was a member of the company’s industry engagement team responsible for the high value payments area, mainly focused on developments (infrastructures, regulatory, market practices) in relation to liquidity, collateral and settlements. He represents RBS in various international groups and committees. Ludy is chair of the Dutch Liquidity Managers Group and deputy chair of the European Banking Authority (EBA) Operations and Technical Committee, and is also a member of the Dutch National User Group on TARGET2, the CLS Treasury Working Group and the EBA Future Development Group.
Citation
De Meijer, Carlo R. W. and Limburg, Ludy (2014, September 1). Intraday liquidity management and reporting: How to meet the challenges. In the Journal of Risk Management in Financial Institutions, Volume 7, Issue 4. https://doi.org/10.69554/WUBI2107.
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