Bank Liquidity

Liquidity is a necessary element to ensure that banks are able to absorb the shocks that result from periods of financial and economic stress while ensuring the proper functioning of financial markets and the banking sector. Compared with the period prior to the financial crisis, banks today have significantly increased the amount of high quality liquid assets (HQLA) on their balance sheets and they regularly engage in liquidity stress testing to ensure they have sufficient HQLA to meet their liquidity needs under a variety of stress scenarios. TCH advocates for liquidity standards that are empirically based and help support the maintenance by banks of stable funding and liquidity profiles, while avoiding unnecessary harm to the U.S. banking sector and the broader economy by imposing costs that outweigh the benefits of additional liquidity.