SWIFT issues white paper on managing liquidity risk at banks
A call for action in a changed and global world
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The banking landscape has changed profoundly since the liquidity crisis that started mid 2007, the collapse of Lehman Brothers in September 2008, and its effect on the "real" economy. During the crisis, liquidity in the international transaction system evaporated as a consequence of trust issues between banks, the complexity of interconnected systems, and the difficulty in alignments of operational practices.
The list of banks that failed, were forced into mergers or rescued is long. Equally, many other banks were well prepared and are now ready to capitalize on new opportunities. The question is: where is your bank at, will it survive the next crisis, and what can you do about it?
To help address these questions, SWIFT published a white paper on managing liquidity risk, identifying gaps in current practices and suggesting areas for banks to improve. Very pragmatically, whilst liquidity risk must be tackled top-down and calculated bottom-up, there are two dimensions that underpin everything else and that can be addressed right now: improve your intra-day liquidity visibility and improve your liquidity forecasting capability.
In addition, the paper calls for more industry dialogue with a view to developing collaborative solutions.
“We seek to engage bank treasury and payments transaction business managers on the topic of liquidity risk, and together figure out practical ways to avoid severe implications when lacking control over it.” says Wim Raymaekers, Head of Banking Market, SWIFTPlease contact us or share your thoughts and opinions at wim.raymaekers@swift.com