BANK3011 Lecture Notes - Lecture 10: Discount Window, Fire Sale, Preferred Stock

• School: University of Sydney
• Department: Bank Financial Management
• Course: BANK3011
• Professor: Eliza Wu

Document Summary

Liquidity risk is a daily concern for fis. Causes of liquidity risk: asset-side liquidity risk. Managing deposit drains using purchased liquidity management: to manage, a di can purchase liquidity by, borrowing on the market for purchased funds to cover cash outflows, the federal funds market (interbank cash market), repurchase agreement (repo) market. Managing asset-side liquidity risk: can also use both purchased and stored liquidity management methods, example: an exercise of million loan commitment. Net liquidity statement: net liquidity statement: lists the sources and uses of liquidity and thus provides a measure of the. It is important that a di manager can measure its liquidity position on a daily basis. Sources of liquidity: cash type assets, maximum amount of borrowed funds available (estimate), excess cash reserves, current liquidity utilization, borrowed or money market funds already utilized, assets already subject to repurchase, example: net liquidity statement.