But, importantly, banks also provide liquidity via committed lines of credit. Indeed, it is probably not a coincidence that these two products – demand deposits and credit lines – are offered under the roof of the same institution; the underlying commonality is that both require an ability to accommodate unpredictable requests for cash on short notice.
Jurisdictions with a foreign bank subsidiary prefer to have a high pre-positioning of internal MREL to ensure an orderly resolution of its local subsidiary. However, this implies a certain degree of ring-fencing to the detriment of the foreign parent bank.