2016-FRR Exam Dumps | BIS Principles for Sound Liquidity Risk Management and Supervision seek to raise standards in which of

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GARP.2016-FRR.v2025-06-21.q161
Question 129

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Question 129/161

BIS Principles for Sound Liquidity Risk Management and Supervision seek to raise standards in which of the following areas?
I. Aligning the risk-taking incentives of individual business units with their liquidity risk exposures.
II. Management of intraday liquidity risks and collateral positions.
III. Public disclosures of a bank's liquidity risk profile and management.
IV. Maintenance of sufficient regulatory capital to survive protracted periods of liquidity stress.

A. I, II, IV

B. I, II, III

C. II, III, IV

D. I, III, IV

Correct Answer: B

Comprehensive and Detailed In-Depth Explanation:
The BIS (Bank for International Settlements) "Principles for Sound Liquidity Risk Management and Supervision" (BCBS, September 2008) outlines 17 principles to enhance liquidity risk management. These principles include:
* I:Principle 2 emphasizes aligning risk-taking incentives with liquidity risk exposures, ensuring business units are accountable for the liquidity implications of their activities.
* II:Principle 11 focuses on managing intraday liquidity risks and collateral positions, critical for real- time payment and settlement systems.
* III:Principle 17 requires public disclosure of liquidity risk profiles to promote market discipline and transparency.
Reference:BCBS, "Principles for Sound Liquidity Risk Management and Supervision," September 2008, Principles 2, 11, 17; GARP FRR Study Notes, Liquidity Risk Section.

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