BANKING AFFAIRS

Detailed explanation-1: -Liquidity is a measure of the cash and other assets banks have available to quickly pay bills and meet short-term business and financial obligations. Capital is a measure of the resources banks have to absorb losses.

Detailed explanation-2: -A bank should actively manage its intraday liquidity positions and risks to meet payment and settlement obligations on a timely basis under both normal and stressed conditions and thus contribute to the smooth functioning of payment and settlement systems.

Detailed explanation-3: -The liquidity coverage ratio is the requirement whereby banks must hold an amount of high-quality liquid assets that’s enough to fund cash outflows for 30 days. 1 Liquidity ratios are similar to the LCR in that they measure a company’s ability to meet its short-term financial obligations.

Detailed explanation-4: -One of the main objectives of liquidity management for every company should be to minimize the risk of having a shortage of liquid assets to pay creditors. In other words, maintaining cash positions that allow you to meet your daily obligations. Minimizing liquidity risk helps you to avoid any insolvency issues.