Skip to content

FRM Part II · FRM Exam Part II · Intraday Liquidity Risk Management

A bank lacks timely information on its intraday positions at its correspondent banks and in the payment systems it uses. Which principle is most directly breached?

The principle on measuring expected daily gross inflows and outflows and monitoring intraday positions against expectations is breached. Without timely position data at correspondents and payment systems, the bank cannot manage intraday liquidity or detect shortfalls in time.

  1. AThe principle requiring that the bank have the capacity to measure expected daily gross liquidity inflows and outflows, and monitor intraday liquidity positions against expected activityCorrect
  2. BThe principle requiring the bank to hold a fixed percentage of deposits as reserves
  3. CThe principle requiring the bank to settle all payments at the end of the day
  4. DThe principle requiring the bank to avoid using correspondent banks

Explanation

The principles call for the ability to measure and monitor intraday positions, including expected gross inflows and outflows, and to track actual flows in real time against expectations. Lack of timely position information directly undermines this. The other options are not Basel intraday principles.

Did you get it right without looking?

One question tells you little. A timed set on Intraday Liquidity Risk Management shows your real accuracy, how long you take and where you lose marks.

Practise Intraday Liquidity Risk ManagementFree diagnostic mock

More Intraday Liquidity Risk Management questions