The Home Loan Bank has £40 million in deposits and is fully loaned up. The bank's desired liquidity ratio is increased. The Home Loan Bank finds that

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When a bank's desired liquidity ratio is increased, it means the bank wants to hold a higher proportion of its assets in liquid form (cash or easily sellable assets) relative to its liabilities (deposits). If the Home Loan Bank is fully loaned up, it means all its deposits are already tied up in loans, leaving it with no excess liquid assets. Therefore, if it increases its desired liquidity ratio, it will find itself with insufficient liquid assets on hand to meet this new desired ratio.

The Home Loan Bank Has £40 Million in Deposits and Is