FRM Part II · FRM Exam Part II · Intraday Liquidity Risk Management
Which of the following is a legitimate source of intraday liquidity for a bank, as opposed to a use of it?
Balances held at the central bank and payments received from other banks during the day are sources of intraday liquidity. Customer payments, securities settlement outflows and margin calls are uses, since they draw down the bank's available liquidity.
- APayments the bank sends on behalf of its customers
- BPayments the bank makes to settle its own securities purchases
- CBalances held at the central bank and payments received from other banks during the dayCorrect
- DMargin calls the bank must meet at a central counterparty
Explanation
Sources include central bank balances, collateral for intraday credit, and incoming payments. Customer payments, securities settlement and margin calls are all uses that consume liquidity.
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