Change Quote by Jerome Powell
“Regulatory changes have forced banks to closely examine their liquidity planning and to internalize the costs of liquidity provision. The costs of committed liquidity facilities will be passed on to clearing members. These costs are perhaps highest in clearing Treasury securities, where liquidity needs can be especially large.”
About This Quote
Source Speech: Financial Stability Report, Federal Reserve, 2023
Banks must scrutinize liquidity and embed its true cost, especially for Treasury clearing where demand spikes.
In simple terms: Banks need to price liquidity accurately, especially for Treasury clearing.
Key Takeaway
Integrate real cost of liquidity into planning.
Themes
risk management
banking
liquidity
regulation
Mood
cautious
analytical
Type
policy
financial.
When to use this quote
- Treasury clearing
- bank liquidity planning
- pricing of services
Key Concepts
financial stability
cost allocation
clearing operations
Questions to Reflect On
- How can banks balance cost pass‑through with market stability?
- What alternatives exist to mitigate high Treasury clearing costs?
A Different Perspective
Liquidity costs may be passed to members, raising overall market fees.
