ii. Example of Second Liquidity Stress

No: 42012157

Date(g): 17/10/2020 | Date(h): 1/3/1442

Status: In-Force

Effective from Aug 31 2021 - Aug 30 2021
To view other versions open the versions tab on the right

An unforeseen, market-wide liquidity stress of three months duration. A bank must assume that the second liquidity stress is characterised by:

	-	Uncertainty as to the accuracy of the valuation attributed to that bank's assets and those of its counterparties.
	-	Inability to realise, or ability to realise only at excessive cost, particular classes of assets, including those which represent claims on other participants in the financial markets or which were originated by them.
	-	Uncertainty as to the ability of a significant number of banks to ensure that they can meet their liabilities as they fall due.
	-	Risk aversion among participants in the markets on which the bank relies for funding.