Encumbrance: Difference between revisions
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==See also== | ==See also== | ||
*[[Charge]] | |||
*[[Collateral]] | *[[Collateral]] | ||
*[[Credit enhancement]] | *[[Credit enhancement]] | ||
Revision as of 14:17, 27 July 2020
An encumbrance is a right over an asset, enjoyed by someone other than the owner of the asset.
Encumbrances prevent or restrict the owner's flexibility to use or dispose of the asset as freely as if it were unencumbered.
For the purposes of bank liquidity liquidity regulation, an asset may be considered encumbered if:
- It has been pledged; or
- It is subject to any arrangement to secure, collateralise or credit enhance any transaction from which it cannot be freely withdrawn.
