Updated Guidance: Interagency Policy Statement on Funding and Liquidity Risk Management on the Importance of Contingency Funding Plans

Summary:

The events of 2023 have underscored the importance of robust liquidity risk management and contingency funding planning. The agencies are issuing this updated guidance to remind depository institutions to maintain actionable contingency funding plans that take into account a range of possible stress scenarios.

Statement of Applicability: The contents of, and material referenced in, this FIL apply to all FDIC-supervised financial institutions.

Depository institutions should:

• Maintain actionable contingency funding plans that take into account an appropriate range of possible stress scenarios.
• Proactively assess the stability of their funding and maintain a broad range of funding sources that can be accessed in adverse circumstances. The agencies encourage depository institutions to incorporate the discount window as part of their contingency funding arrangements.
• Be aware of the operational requirements to obtain funding from contingent sources, including testing access to contingent funding sources on a regular basis.
• Ensure that collateral is available for borrowing in an amount appropriate for potential contingency funding needs. Additionally, depository institutions should plan for potential operational challenges involved in moving and posting collateral.
• Review and revise contingency funding plans periodically and more frequently as market conditions and strategic initiatives change in order to address evolving liquidity risks.