The Financial Services Authority released a new report on liquidity, in which it decried financial firms’ lack of liquidity.
“We do not consider that holding a buffer of liquid assets designed to protect against liquidity stress is sufficient. Each firm should know its gross liquidity risk, not just the mechanisms to mitigate the risk when crystallised,” the report states.
It goes on to say that “extreme liquidity events” are quite commonplace, and firms should adjust their strategies accordingly.
For the full report, click here.
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