Liquidity and Reserves Management: Strategies and Policies (FRM Part 2 2023 – Book 4 – Chapter 5)

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After completing this reading, you should be able to:
- Calculate a bank’s net liquidity position and explain factors that affect the supply and demand for liquidity at a bank.
- Compare the strategies that a bank can use to meet demands for additional liquidity.
- Estimate a bank’s liquidity needs through three methods (sources and uses of funds, the structure of funds, and liquidity indicators).
- Summarize the process taken by a US bank to calculate its legal reserves.
- Differentiate between factors that affect the choice among alternative sources of reserves.