Intraday liquidity
Intraday liquidity is the money a bank can use during the business day to make payments on time: balances on central bank and correspondent accounts plus credit it can draw intraday. Intraday liquidity risk is failing to make time-critical payments because outflows come before inflows. Basel Committee tools (BCBS 248) measure it.
Roles that need it
What it is
Intraday liquidity is the money a bank can use during the business day to make its payments on time. It includes balances on central bank and correspondent accounts, plus credit the bank can draw during the day, such as intraday credit from the central bank against collateral. Intraday liquidity risk is the risk that a bank cannot make time-critical payments when due, because outgoing payments come before incoming ones. The Basel Committee’s monitoring tools (BCBS 248, 2013) ask banks to measure, among other things, their daily maximum intraday liquidity usage, the liquidity available at the start of the day, total payments, and time-specific obligations.
Why it matters
Payment systems settle gross and in real time, so a bank needs funds for each payment when it is sent. If many banks wait for incoming funds before paying, the whole system can slow down or gridlock. A shortage can make a bank miss deadlines for securities settlement, margin calls or client payments, with costs and damage to its reputation. Supervisors review intraday liquidity in the internal liquidity adequacy assessment (ILAAP) and in stress tests. Instant payments add nights and weekends: liquidity must be in place before T2 closes.
Worked example
Illustrative numbers. A bank starts the day with 500 million euro on its T2 account and 1 billion euro of collateral available for intraday credit. Between 08:00 and 10:00 it pays out 900 million euro and receives 300 million euro. Its balance would fall to minus 100 million euro (500 minus 900 plus 300), so it draws 100 million euro of intraday credit. By 16:00 it has received another 800 million euro and repaid the credit. Its daily maximum intraday liquidity usage is 600 million euro, the largest net outflow at any point (900 out minus 300 in). If a counterparty had delayed its 300 million euro payment, usage would have reached 900 million euro, still inside the 1.5 billion euro available.
Who uses it
Treasury operations analysts (TRESOPS) manage the position minute by minute and decide when to release large payments. Liquidity risk analysts (LIQRISK) design the metrics and stress scenarios. Liquidity reporting analysts (REGREP-LIQ) produce the monitoring reports for supervisors. ALM analysts (ALM) size the collateral and buffers that support intraday needs. Treasury analysts (TRES) plan funding across the day. Payments sales for financial institutions (PCMSALES-FI) agree intraday credit lines with client banks that settle through the bank.
Common confusions
Intraday liquidity is distinct from the liquidity coverage ratio, which measures a 30-day stress using end-of-day positions. A bank can have a strong end-of-day position and still struggle at 10:00. Intraday credit from the Eurosystem is free of interest, but it needs eligible collateral, and that collateral then cannot be used elsewhere. Finally, payment throughput (the share of payments made by set times) describes behaviour, while usage measures liquidity needs; supervisors watch both.