Liquidity is the watchword in a post-GFC world. Following the 2008 crash, one of the overarching priorities for regulators has been to ensure that banks and other institutions are sufficiently well managed to absorb unexpected systemic shocks while ensuring they...
All bank failures start with a collapse of confidence and trust. So it follows that credit is trust expressed in monetary terms – a creditors’ belief that borrowers will repay principal and pay interest on loans. In essence, we judge banks on what they may...
The Federal Reserve and FBO compliance. Why liquidity risk is racing up the agenda Can you imagine what it is like to be the Federal Reserve? You are the bank for banks. And if you think customers are hard to predict, please and protect. Try doing this, but for banks....
You know where you are with a lion; it sleeps and then it hunts. A black swan is not as predictable. Plan for it, or you’ll discover that its dark undertow has pulled you deep into trouble. By then it will be too late. In the financial industry, the term “Black Swan...
We have names for things that go spectacularly wrong. In the context of financial failure, apart from the obvious ‘Black Swan’, the word ‘wonky’ is more apt than you may think. Wonky starts with the noun wonk, meaning ‘one preoccupied with the arcane details or...
