Large Bank Examination Workshop February 2026

Let’s go to Exercise 2 Page 4

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Red Flags and Early Warning Indicators EWI • Each liquidity metric should have an EWI to complement limits  Not meant as replacement for limits • EWIs provide notice of deteriorating conditions • EWIs should be set at level near enough to be relevant but high enough to allow institution to take action  Example: LCR limit is 100; EWI could be at 110, 105, 102 etc. • Red Flags – not usually an official metric; developed to aid liquidity managers identify emerging risks and socialize liquidity information between areas – break the silo!  Example: increase in collateral upgrade requests from core funding providers

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