FRM Part II · FRM Exam Part II · Intraday Liquidity Risk Management
Which of the following is a use of intraday liquidity that a bank should monitor as part of its intraday liquidity management?
Making time-specific payments, such as settlement obligations in payment systems, is a use of intraday liquidity because it consumes funds. Receiving settlement proceeds, pledging collateral to obtain credit and drawing a committed intraday line are all ways of obtaining liquidity, so they count as sources.
- AReceipt of a securities sale settlement from a counterparty
- BPosting of eligible collateral to obtain additional central bank intraday credit
- CMaking time-specific payments, such as for settlement obligations in payment systemsCorrect
- DDrawing on a committed intraday credit line from its central bank
Explanation
Uses are outflows and obligations that consume liquidity, such as payments in settlement systems, time-specific obligations and customer-related payments. Receipts, collateral posting to get credit and drawing lines generate or access liquidity, so they are sources.
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