Liquidity risk

Liquidity risk is the risk of loss resulting from the inability to meet payment obligations in full and on time when they become due.

Liquidity risk is inherent to the Bank's business. It results from different maturity profiles between assets and liabilities. It can arise if the Bank is unable to obtain new financing or convert liquid assets into cash without incurring significant losses.

The CEB takes a prudent approach to managing liquidity risk. Funding strategy is an important element of this management, with the CEB diversifying its debt issuance programs, funding markets, and investor base to avoid over-reliance on individual markets or funding sources. The Bank also holds a liquidity reserve consisting of highly rated liquid securities to be able to face extreme market conditions during which new financing would not be available.

The CEB assesses liquidity risk on the basis of internal indicators that measure the period during which it can meet its payment obligations arising from ongoing business operations in severe crisis scenarios. The Bank also complies with the Basel regulatory liquidity requirements.