20 May Known Unknowns: Assessing Liquidity Reporting in the Age of COVID-19
Pandemic Forces Financial Institutions to Contemplate Readiness for Once-in-a-Lifetime Liquidity Challenges
Throughout the COVID-19 pandemic, the one variable most keeping the world’s central bankers awake at night is – liquidity risk and liquidity reporting. With memories of the 2008 financial crisis still fresh, monetary authorities responded quickly and aggressively with stimulus and interventions designed specifically to stave off that risk.
Along with the focus on maintaining liquidity through central bank actions, the pandemic crisis has also conjured other spirits of the past crisis. Among them is the host of new liquidity reporting requirements for financial institutions that were put in place after the 2008 crisis and that few thought would ever be used again.
AxiomSL has been tracking liquidity reporting thresholds globally throughout the COVID-19 crisis to ensure that its liquidity reporting and risk calculation solution stays up to date with rules libraries ready for new liquidity reporting requirements as they are triggered. While many of these thresholds have already been reached by some firms, offering a roadmap for what’s required and reporting best practices, others are still looming in the background with little known about how financial firms will comply or whether they will ever reach the point where these safety switches will need to be flipped.