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

Which of the following is a typical source of intraday liquidity for a bank?

Typical sources of intraday liquidity are central bank balances, collateralised intraday credit, incoming payments and unencumbered liquid assets. Long-term debt, fixed assets and unrealised gains cannot be mobilised quickly enough to meet payments due during the same day.

  1. ABalances held at the central bank and intraday credit secured against collateralCorrect
  2. BLong-term subordinated debt maturing in five years
  3. CRetained earnings from the previous fiscal year that are invested in fixed assets
  4. DUnrealised gains on the bank's held-to-maturity portfolio

Explanation

Intraday sources include central bank reserves, collateralised intraday credit lines, incoming payments and unencumbered liquid assets that can be pledged quickly. Long-term debt, fixed assets and unrealised gains are not available to settle payments within the day.

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