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The total stock of High Quality Liquid Assets should EXCEED the 30 day outflow projected for the bank. As a formula it looks as shown below:

High Quality Liquid Assets:

Level 1 assets are the best: require no haircut. $ 100 of asset can be taken as worth $ 100

Level 2 assets are the next grade: 15% + haircut usually required. $ 100 of asset can be taken as worth $ 85 at best.

A National Regulator will categorize assets into levels; and specify appropriate haircuts.

Monitoring Tools:

1. Contractual Maturity Mismatch

2. Concentration of Funding

3. Available Unencumbered Assets

4. LCR by significant currency

5. Market-related monitoring tools

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