Liquidity in the banking sector is a fundamental pillar of financial system stability in any country.
Following the 2008 global financial crisis, liquidity measurement standards became a focus of attention for global regulatory bodies, most notably the Basel Committee on Banking Supervision (BCBS) and central banks.
Bank liquidity reflects a bank’s ability to meet its financial obligations when they become due without incurring significant losses. Liquidity management is one of the most significant challenges facing financial institutions, as banks must balance achieving profitability through investing funds and deposits, while maintaining sufficient levels of liquidity to meet customer needs and address unforeseen circumstances.
Liquidity management remains an ongoing challenge for banks, as they must balance profitability and financial soundness. As the economic and regulatory environment continues to change, the ability to adapt and proactively manage liquidity will remain critical to the success of financial institutions.
The Saudi Central Bank (SAMA) supervises liquidity levels in Saudi banks according to specific standards and tools implemented in line with the global Basel III requirements, the most important of which are Liquidity Coverage Ratio (LCR), high-quality liquid assets (HQLA), Loan-to-Deposit Ratio (LDR) and Net Stable Funding Ratio (NSFR).
Liquidity in the banking sector is a fundamental pillar of financial system stability in any country.
Following the 2008 global financial crisis, liquidity measurement standards became a focus of attention for global regulatory bodies, most notably the Basel Committee on Banking Supervision (BCBS) and central banks.
Bank liquidity reflects a bank’s ability to meet its financial obligations when they become due without incurring significant losses. Liquidity management is one of the most significant challenges facing financial institutions, as banks must balance achieving profitability through investing funds and deposits, while maintaining sufficient levels of liquidity to meet customer needs and address unforeseen circumstances.
Liquidity management remains an ongoing challenge for banks, as they must balance profitability and financial soundness. As the economic and regulatory environment continues to change, the ability to adapt and proactively manage liquidity will remain critical to the success of financial institutions.
The Saudi Central Bank (SAMA) supervises liquidity levels in Saudi banks according to specific standards and tools implemented in line with the global Basel III requirements, the most important of which are Liquidity Coverage Ratio (LCR), high-quality liquid assets (HQLA), Loan-to-Deposit Ratio (LDR) and Net Stable Funding Ratio (NSFR).
