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Much ink has been spilled on the issue of liquidity, and more specifically on liquidity risk, during the last year. From a Luxembourg perspective, this has materialised through the emphasis of its regulatory authority striving to find efficient, concrete and scalable methodologies to supervise the management of liquidity risk, whilst the regulated financial actors are trying to find ways to implement more accurate and pragmatic controls.
In simple terms, liquidity risk refers to the inability of an institution to honour payments without seriously disrupting its finances. As there are many forms of liquidity risk drivers, the action plan devised by the regulatory authority consists mainly in progressively implementing directives and guidelines that tackle liquidity risk from...
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