This document presents one of the Basel Committee’s key reforms to develop a more resilient banking sector: the Liquidity Coverage Ratio (LCR). The objective of the LCR is to promote the short-term resilience of the liquidity risk profile of banks. It does this by ensuring that banks have an adequate stock of unencumbered high-quality liquid assets (HQLA) that can be converted easily and immediately in private markets into cash to meet their liquidity needs for a 30 calendar day liquidity stress scenario.

Links at NCUA referring to Liquidity and Contingency Funding

Submitted by sevans on Mon, 02/23/2015 - 2:59pm

The link:

Provides quick links to a number of other sites at NCUA with further information on:

  • Liquidity Review Questionnaire
  • Guidance on how to comply with NCUA Liquidity Regulations
  • Part 741.12 Liquidity and Contingency Plans
  • Interagency Policy on Funding and Liquidity Risk Management 

In addition to a written liquidity policy, a FICU with assets of $50 million or more must have a contingency funding plan (CFP) that clearly sets out strategies for addressing liquidity shortfalls in emergencies. A CFP must include policies, procedures, projection reports, and action plans designed to ensure a credit union’s sources of liquidity are sufficient to fund operating requirements under contingent liquidity events.

Components of a credit union’s Liquidity policy

Submitted by sevans on Mon, 02/23/2015 - 2:55pm

(Credit unions must have a Liquidity Policy …)

This policy does not need to be elaborate, but it must cover certain basic elements that are fundamental to all depository institutions, including all of the following elements:

Elements of a Contingency Funding Plan

Submitted by sevans on Tue, 02/17/2015 - 3:15pm

Contingency Funding Plan: A credit union must have a written CFP commensurate with its complexity, risk profile, and scope of operations that sets out strategies for addressing liquidity shortfalls in emergency situations. The CFP may be a separate policy or may be incorporated into an existing policy such as an asset/liability policy, a funds management policy, or a business continuity policy. The CFP must address, at a minimum, the following:

(1) The sufficiency of the institution's liquidity sources to meet normal operating requirements as well as contingent events;

In addition to the requirement specified in paragraph (b) of this section to establish and maintain a CFP, any credit union insured pursuant to Title II of the Act that has assets of $250 million or more must establish and document access to at least one contingent federal liquidity source for use in times of financial emergency and distressed economic circumstances. These credit unions must conduct advance planning and periodic testing to ensure that contingent funding sources are readily available when needed.