Skip to content

FRM Part II · FRM Exam Part II · Monitoring Liquidity

Which practice best reflects BCBS principles for a bank's management of intraday liquidity risk?

The sound practice is to measure expected daily gross inflows and outflows and forecast their timing where possible. End-of-day balances hide intraday peaks, central bank credit cannot be assumed always available, and significant currencies beyond the largest also need monitoring.

  1. AHaving the capacity to measure expected daily gross liquidity inflows and outflows and forecast the timing of them where possibleCorrect
  2. BRelying solely on end-of-day balances because intraday positions net out
  3. CAssuming all intraday credit from the central bank remains available in every stress
  4. DMonitoring intraday positions only for the largest currency

Explanation

The principles require banks to measure and forecast intraday inflows and outflows and their timing, and to monitor positions against expected activity. End-of-day views miss intraday peaks, assuming central bank credit is always available ignores stress, and monitoring only one currency leaves other significant currencies unmanaged.

Did you get it right without looking?

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

Practise Monitoring LiquidityFree diagnostic mock

More Monitoring Liquidity questions