A disadvantage of using stored liquidity management to manage a FI's liquidity risk is
A)the resulting shrinkage of the FI's balance sheet.
B)the high cost of purchased liabilities.
C)the accessibility of international money markets.
D)tax considerations.
E)loss of flexibility as a result of dependence upon purchased liabilities.

Question

Quizplus · Accepted Answer

Stored liquidity management involves using the FI's own liquid assets to meet liquidity needs, which can lead to a reduction in the size of the balance sheet as these assets are used up.

A Disadvantage of Using Stored Liquidity Management to Manage a FI's