Capital Markets School - Case Study

The static liquidity ratios trended above serve as the primary measurement of liquidity, and the following scale serves as warning of potential liquidity stress: • Liquidity is considered to be “Normal” or “N/A” when all liquidity measurement ratios are within level 1 risk limits, and there is no material threat of a liquidity crisis. • Liquidity is considered to be “Low” or a “Level A” when liquidity measurement ratios are outside level 1 risk limits, and heightened risk reporting and/or monitoring is prudent. • Liquidity is considered “Watch” or a “Level B” when liquidity measurement ratios are outside level 2 risk limits, and preemptive action(s) are likely needed. • Liquidity is considered “Critical” or a “Level C” when liquidity measurement ratios are outside established policy limits or level 3 risk limits, and immediate action(s) are required. Liquidity risk is considered “Normal” as of September 30, 2021. Please see the Liquidity Risk Monitor included in Exhibit C for risk level detail.

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