Liquidity swap

Liquidity swaps typically refer to transactions which effect a liquidity transformation between:

an insurer (which has plenty of liquidity) and

a bank (which is temporarily short of liquidity).

This is usually done by exchanging high-credit quality, liquid assets such as gilts held by the insurer, with illiquid or less liquid assets, such as asset-backed securities (ABS) held by the bank.

See also

• Asset backed securities
• Collateral swap
• Liquidity
• Liquidity insurance
• Repo
• Securities Financing Transaction Regulation
• Sterling Monetary Framework
• Stress