What are the possible ways that a bank can meet an expected net deposit drain of +4 per cent using purchased liquidity management techniques?
A)Utilise the interbank funds market and repurchase agreements.
B)Utilise repurchase agreements.
C)Liquidate all cash holdings.
D)All of the listed options are correct.

Question

Quizplus · Accepted Answer

Utilising the interbank funds market and repurchase agreements would allow the bank to acquire the necessary funds to meet the expected net deposit drain without having to liquidate all cash holdings, which could impact the bank's ability to meet other obligations and increase costs associated with rapid asset sales. This option also allows the bank to effectively manage its liquidity position by actively monitoring and adjusting its funding sources to match changing market conditions. Utilising repurchase agreements alone may not be sufficient to meet the expected net deposit drain and liquidating all cash holdings may not be the most efficient or effective solution.

What Are the Possible Ways That a Bank Can Meet