Liquidity management techniques and best practice: General principles, specific applications

Events of the past two years have thrown the spotlight on liquidity management.

Market conditions have driven the need to minimise liquidity risks, reduce funding costs and maximise strategic financial flexibility without compromising solvency. As a result, treasuries around the globe have been assessing various liquidity management techniques and their suitability for addressing these needs. While these techniques can be combined into sophisticated and complex liquidity management structures, at its most basic level liquidity management is essentially simple namely the optimal combination of positive and negative cash flows with other funding sources or investments.

One size doesn't fit all

How this optimal combination is achieved is a highly organisation-specific matter there is no universal right solution to liquidity management. While certain generic best practice principles do...

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