finance

Just a decade ago the concept of bank liquidity was for all intents and purposes only one for the Bank Regulator to really concern himself with. A bank had to remain liquid -critical if it were to enjoy the confidence of its depositors - but this criticality was an "after the event" issue. Then banks enjoyed a high degree of anonymity and choice in how it managed its liquidity. This was as a result of the techniques then used for settling interbank obligations. These techniques had been devised and refined over two or more centuries. They had come from a pre-computer world that relied on manual transaction processing of instruments such as cheques. Early moves at computerization of bank processes simply mechanized the manual approach by using the batch processing system. So the critical factor that related to the measuring of a bank's liquidity could only be determined after the end of the trading day had been completed and all the "ins" and th...