Liquid assets that banks need to maintain their ability to pay. – From the perspective of the individual bank, this basically includes all assets that can be converted into cash at any time (liquidated: which could be easily and without any problem be converted into cash), such as marketable securities or balances with other credit institutions. – However, the banking system as a whole cannot pay with claims of banks on each other, but only with central bank money. The banks’ aggregate liquidity position therefore only includes – their current holdings of central bank balances and cash: Cash – plus their potential balances that can be obtained from the ECB through its facilities. – See Basel III, benchmark allocation, capital buffer, countercyclical, core capital ratio, liquidity management, solvency supervision, corporate finance. – For the liquidity situation of banks, see the annex “Euro area statistics” in the respective ECB Monthly Bulletin, section “Monetary developments, banks and investment funds.”
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University Professor Dr. Gerhard Merk, Dipl.rer.pol., Dipl.rer.oec.
Professor Dr. Eckehard Krah, Dipl.rer.pol.
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