FRM Part II · FRM Exam Part II · Monitoring Liquidity
Which indicator would best help a bank monitor whether it can meet payment obligations that must be settled at a specific time of day, such as CLS pay-ins or securities settlement deadlines?
Time-specific and other critical obligations is the best indicator, because it tracks payments that must settle by a particular time, such as settlement pay-ins. Failing them creates penalties or reputational harm, so they need dedicated monitoring beyond general volume or throughput measures.
- ATime-specific and other critical obligationsCorrect
- BIntraday throughput
- CTotal payments received
- DLargest customer payment
Explanation
Time-specific and other critical obligations is the Basel tool for payments that must be made by a particular time, whose failure causes financial penalty or reputational damage. Throughput shows the timing profile of payments, but not the critical deadline obligations themselves.
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