Liquidity swap: Difference between revisions
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imported>Doug Williamson (Create page. Source: FCA webpage https://www.fca.org.uk/publication/guidance-consultation/gc11_18.pdf) |
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Revision as of 12:04, 20 August 2019
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.
