Liquidity
the ability to pay right now without selling everything off in a panic
In more detail
The ability to pay right now without selling anything at a loss. This is not about whether the institution is rich but about whether it has the right money to hand at the right minute.
The concept is needed because customers' money leaves at the speed of a button press, while the loans that have been made lie there for years. The gap between those speeds is the treasury's job.
Where it appears in the course
- Chapter 4 of 16 · The Bank Treasurer
- Chapter 12 of 16 · The Regulator
- Chapter 16 of 16 · Private Capital
In the academy “Liquidity” is not a definition but an operation: you post it yourself and watch what it does to the balance sheet.