The primary issue for insuring prudent liquidity management in accord with the guidance provided by the Basel Committee (Basel II I Basel III) is:
A) Tier 3 capital requirements held against liquidity risk.
B) The nature and amount of high quality liquid assets a bank holds.
C) Central bank internal management processes regarding open market operations.
D) The transparent disclosure of illiquid on-balance sheet liabilities.

Question

Quizplus · Accepted Answer

The primary issue for insuring prudent liquidity management in accord with the guidance provided by the Basel Committee is the nature and amount of high quality liquid assets a bank holds. Basel II and III require that banks hold sufficient high quality liquid assets to withstand periods of stress or economic downturns. The other options listed are important aspects of liquidity risk management but are not the primary issue.

The Primary Issue for Insuring Prudent Liquidity Management in Accord