Unless otherwise defined, organizational precautions taken by a bank in the event of a liquidity shortage. – In view of the experience gained from the subprime crisis and the subsequent financial crisis, the Basel Committee on Banking Supervision requires institutions to have more hard equity than liabilities in a thirty-day stress test in the future. The same performance target for liquidity management is also to apply on a one-year horizon, albeit not under the conditions of a worst-case scenario. – See meltdown risk, arrangement, asset quality review, balance sheet tricks, government, earnings weakness, contingency plan, liquidity coverage ratio, liquidity buffer, liquidity risk, liquidity shock, market risk stress test, risk management, risk-bearing capacity, shock, external, sensitivity analysis, confidence, volatility, worst case scenario. – See BaFin Annual Report 2007, p. 116 (supervisory focus on liquidity crisis plans); BaFin Annual Report 2008, p. 56 (liquidity risk management rules); BaFin Annual Report 2009, p. 51 (CEBS recommendations on the appropriate level and composition of the liquidity buffer); and the respective BaFin Annual Report, chapter “International.”
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University Professor Dr. Gerhard Merk, Dipl.rer.pol., Dipl.rer.oec.
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