At that point, the Bank would start buying assets again as part of our regular balance sheet management process. 9 Given that a great deal of uncertainty surrounds our estimate for the long-run level of reserves needed, we will be monitoring short-term funding conditions as our settlement balances decline.
A key qualitative component of liquidity surveillance in the BCL is the assessment of banks’ liquidity risk management frameworks. As painfully learned from the crisis, this should be the first-line bulwark to defend an institution against liquidity risk.