A contingency funding plan (CFP) includes policies, procedures, projection reports, and action plans designed to ensure a bank’s sources of liquidity are sufficient to fund normal operating requirements under contingent liquidity events. The objectives of the CFP are to do the following:
- Provide a plan for responding to various and increasing levels of a bank’s liquidity stress.
- Designate management responsibilities, crisis communication methods and channels, and reporting requirements.
- Identify a menu of contingent liquidity sources that a bank can use under various and increasing adverse liquidity circumstances.
- Describe steps that should be taken to ensure that the bank’s sources of liquidity are sufficient to fund scheduled operating requirements and meet the institution’s commitments with minimal costs and disruption.