Recent turmoil in the financial markets emphasizes the importance of effective
liquidity risk management to the safety and soundness of financial institutions.
The proposed Guidance clarifies the process that financial institutions should
follow to appropriately identify, measure, monitor and control funding and
liquidity risk, including effective corporate governance; provides an overview
of appropriate strategies, policies and procedures, which include risk limits
for managing and mitigating risks; and discusses the management of intraday
liquidity and collateral.
Institutions are expected to have in place appropriate measurement, monitoring
and reporting systems commensurate with the risk profile and business activities
of the institution. These systems should include provisions for stress testing
an institution's liquidity position under various adverse scenarios.
The Guidance emphasizes the importance of certain tools for sound liquidity and
funding risk monitoring and management, including cash-flow projections,
diversified funding sources, a cushion of liquid unencumbered assets, and a
well-developed, documented, and Board reviewed contingency funding plan.
Financial institutions should implement effective liquidity and funding
management internal controls and review procedures to monitor compliance with
supervisory directives, internal policies, and management reporting.
This proposed Guidance is intended to supplement existing guidance. FIL-84-2008, "Liquidity Risk
Management," issued by the FDIC in 2008, still remains in effect.
FDIC-Supervised Banks (Commercial and Savings)
Chief Executive Officer
Chief Financial Officer
Chief Risk Officer
Principles for Sound Liquidity Risk
Management and Supervision
Liquidity Risk Management,
Part 337.6 of the FDIC's Rules and Regulations - Brokered Deposits
Notice of Proposed Rulemaking,
Interagency Guidance on Funding and Liquidity Risk Management - PDF 420k (PDF Help)
Kyle Hadley, Senior Financial Analyst, at
KHadley@fdic.gov or (202) 898-6532
FDIC financial institution letters (FILs) may be accessed from the FDIC's Web site
To receive FILs electronically, please visit http://www.fdic.gov/about/subscriptions/fil.html.
Paper copies of FDIC financial institution letters may be obtained through the
FDIC's Public Information Center, 3501 Fairfax Drive, E-1002, Arlington, VA 22226
(1-877-275-3342 or 703-562-2200).