Liquidity: As explained through Black History

In honor of Black History Month and the newly released NCUA Supervisory Priorities, I thought it’d be perfect timing to tackle a topic that’s on most credit union professionals’ minds: liquidity. Today’s blog will focus on the different types of liquidity concerning a credit union.

While liquidity is normally a primary concern for the Chief Financial Officer or executive level staff, it is a good idea for compliance professionals to be aware of liquidity issues. NCUA examines credit unions based upon their liquidity risk, which affects the overall health of the credit union.

NCUA’s Examiner’s Guide defines liquidity as

“a credit union’s capacity to meet its cash and collateral obligations at a reasonable cost. Maintaining an adequate level of liquidity depends on a credit union’s ability to efficiently meet both expected and unexpected cash flows and collateral needs without adversely affecting the credit union’s daily operations or financial condition.”

 

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