ntroduction
Liquidity Risk is far from being just another reporting exercise. This risk topic deserves
special attention for two distinct reasons. On the one hand, liquidity risk has unique
features, chief among which the direct threat to continuation of a bank’s existence it
poses, that make it deserve special attention. On the other hand, the determination of
liquidity buffers as mandated by Basel III has far-reaching consequences not just on the
structure of the balance sheet, but also on interest rate risk management, funds transfer
pricing and a bank’s profitability. In this paper, In this paper, David Renz sheds light on
the pain points which the first big novelty of Basel III is going to bring along.