CFP’s💧 How banks survive liquidity crises. #Banking #Liquidity #Risk
13 April 2026·1 min
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Welcome to this session from the Industry Portal liquidity management course, where we focus on what happens when normal liquidity management breaks down.
When markets freeze, funding assumptions fail, and confidence disappears, banks rely on one critical tool: the Contingency Funding Plan (CFP).
In this video, we break down what a CFP is and how it acts as a practical playbook for managing real liquidity crises. You will learn how banks identify early warning signals, including movements in LCR, deposit outflows, funding market stress, and collateral pressures, allowing them to act before a situation escalates.
We explore governance and escalation frameworks, including crisis committees, senior management involvement, and Board level decision making. You will see how clearly defined triggers and roles enable faster, more effective responses when time is critical.
A key focus is the range of liquidity actions available during stress, from deploying high quality liquid assets and accessing market funding to using central bank facilities and executing intragroup support. We also cover balance sheet actions and the operational realities of executing these measures under pressure.
The session highlights the importance of communication, showing how managing market confidence with regulators, counterparties, customers, and investors can be just as important as managing liquidity itself.
We also explain how CFPs are tested and maintained through dry runs and simulation exercises, ensuring both systems and decision makers are prepared for real events. From a regulatory perspective, we cover how CFPs are assessed under frameworks such as ILAAP by supervisors including the Prudential Regulation Authority and the European Central Bank.
By the end of this session, you will understand how a strong Contingency Funding Plan bridges the gap between analysis and action, ensuring banks can respond quickly, coherently, and credibly during liquidity stress.
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#CFP #LiquidityManagement #Banking #Finance #Treasury #RiskManagement #ILAAP #CrisisManagement #theindustryportal
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