In other words, these models assume complete illiquidity throughout a stated holding period. Another widely used, but more sophisticated, approach that takes account of liquidity risk is stress testing. Unlike value-at-risk models, which usually assume normal market conditions, stress tests help to quantify how much a firm could lose in unusual or stressful scenarios.
The average amount of cash that people carry on them has also remained unchanged since the previous study at € This apparent inertia may seem unspectacular at first glance, yet it implies that citizens have relatively stable preferences with regard to the payment instruments that they use.