Banking supervisors issued a joint policy statement outlining their position on liquidity risk, aligning it more closely with guidance issued by the Basel Committee on Banking Supervision. The regulators said the statement explains their expectations for effective management of liquidity risk. "Recent events illustrate that liquidity risk management at many financial institutions is in need of improvement," according to the statement. "Deficiencies include insufficient holdings of liquid assets, funding risky or illiquid asset portfolios with potentially volatile short-term liabilities, and a lack of meaningful cashflow projections and liquidity contingency plans."
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