Cryptocurrency
Shadow Banking
Shadow Banking
Shadow banking refers to a parallel financial system that operates alongside the traditional banking system. It involves non-bank financial intermediaries and activities that perform bank-like functions, such as credit intermediation, liquidity provision, and maturity transformation. These activities are conducted outside the scope of traditional banking regulations and oversight. Shadow banking entities include investment banks, […]
Securities Financing Transactions (SFTs)
Securities Financing Transactions (SFTs) refer to transactions involving the lending and borrowing of securities. These transactions typically take place between financial institutions and investors and are conducted for purposes such as providing liquidity, hedging positions, or creating short positions. SFTs generally include the following types of transactions: Securities lending: An investor or financial […]
Secured Overnight Financing Rate (SOFR)
Secured Overnight Financing Rate (SOFR) is a benchmark interest rate used in the United States financial markets. It is an overnight rate based on secured transactions, specifically repurchase agreements (repos). A repurchase agreement, or repo, is a transaction where one party sells a security (usually a bond or Treasury) to another party with an […]
Liquidity Coverage Ratio (LCR)
The Liquidity Coverage Ratio (LCR) is a regulatory requirement introduced by the Basel III framework to ensure that financial institutions maintain sufficient liquidity to withstand a significant stress event. It is designed to prevent liquidity shortages and promote the stability of financial systems. The LCR measures a bank’s ability to meet its short-term liquidity […]
LIBOR (London Interbank Offered Rate)
LIBOR stands for the London Interbank Offered Rate. It is an international benchmark interest rate used to determine interest rates for various financial products such as loans, bonds, and derivatives. Here is a more detailed explanation of LIBOR: Purpose of LIBOR: LIBOR represents the interest rates at which banks lend to each other. […]
High Quality Liquid Assets (HQLA)
High-Quality Liquid Assets (HQLA) refer to high-quality and highly liquid assets. These assets are used by financial institutions to meet their liquidity needs and are considered safe and easily convertible into cash. The purpose of HQLA is to enhance the ability of financial institutions to provide liquidity and sustain their operations during financial crises or […]
