Liquidity Day 12: Funding Markets Explained - How Banks Raise Liquidity
29 March 2026·13 min
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In this session of the Liquidity Management course from The Industry Portal, we focus on one of the most critical responsibilities of the Treasury function: accessing funding markets. While previous sessions explored internal liquidity management, governance, and stress preparedness, this lesson explains how banks actually raise liquidity from external markets and why market access is fundamental to liquidity resilience.
This session provides a detailed, practical overview of the funding instruments banks use and the strategic decisions that sit behind them. You will learn how banks operate in both unsecured and secured funding markets, how different instruments behave under normal and stressed conditions, and how Treasury teams manage pricing, maturity, and diversification.
We begin by explaining unsecured funding sources, including corporate and financial institution deposits, interbank lending, commercial paper, certificates of deposit, and senior unsecured bond issuance. The session shows how these instruments support short, medium, and long term funding needs, and how banks balance flexibility, cost, and stability when accessing unsecured markets.
The lesson then turns to secured funding, including repurchase agreements, covered bonds, securitisation structures, and central bank operations. You will understand how collateral is used to raise funding, how repo markets function, and why collateral availability, haircuts, and operational readiness are critical during periods of market stress.
A key theme throughout the session is funding diversification. We explain why banks avoid concentration in single funding sources, currencies, maturities, or counterparties, and how Treasury teams actively manage these risks. You will learn how maturity ladders, currency specific funding strategies, and investor diversification support resilience and regulatory compliance.
The session also explores how regulatory requirements shape funding strategy. We cover how metrics such as the Liquidity Coverage Ratio and Net Stable Funding Ratio influence instrument choice and maturity structure, and how supervisory reporting frameworks in the UK and EU provide regulators with deep visibility into banks’ funding profiles.
You will also gain insight into the role of investor relations, market reputation, and credibility in maintaining funding access. The importance of communication with investors, counterparties, and central banks is discussed, along with how Treasury teams prepare for periods when markets may partially or fully close.
Emerging trends are also covered, including the growth of green and sustainable funding instruments and how ESG considerations are becoming part of funding strategy. We explain how these instruments fit within broader liquidity management frameworks and investor engagement.
By the end of this video, you will understand how banks move money in and out of the institution through capital markets, why funding strategy is a core element of liquidity risk management, and how Treasury teams balance cost, flexibility, regulation, and resilience. This session sets the foundation for the next lesson, where we examine liquidity management across borders, legal entities, and currencies in international banking groups.
bank fundingfunding marketsliquidity fundingliquidity managementliquidity risktreasury fundingsecured fundingunsecured fundingrepo marketrepurchase agreementscommercial papercertificates of deposit
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