Intraday liquidity: money in the account when each payment is due

The Basel Committee published its monitoring tools for intraday liquidity management in April 2013, developed with the Committee on Payment and Settlement Systems. The tools are for monitoring only, internationally active banks have to apply them, and monthly reporting began on January 1, 2015, together with the liquidity coverage ratio.

There are seven tools in three groups. For all reporting banks: daily maximum intraday liquidity usage, available intraday liquidity at the start of the business day, total payments, and time-specific obligations. For banks that provide correspondent banking services: the value of payments made on behalf of correspondent customers, and intraday credit lines extended to customers. For direct participants in a payment system: intraday throughput. The framework adds four stress scenarios: the bank's own financial stress, counterparty stress, a customer's stress and market-wide credit or liquidity stress.

A direct participant in a large-value system such as T2 sees its own settlement times. A bank that pays through correspondents often does not: The Global Treasurer reported that correspondents typically send end-of-day statements without intraday reports or settlement notifications, so the daily maximum usage rests on unreliable timestamps. The ISO 20022 intraday report camt.052 and the notification camt.054, described under camt.053, carry that information today.

In T2, central liquidity management moves funds between a bank's main cash account and the accounts for each service during the day. Priorities, reservations and limits decide which payment settles first when liquidity is short.

ECB Banking Supervision published sound practices for managing intraday liquidity risk in November 2024, according to BDO, after a review of global systemically important banks. They ask for intraday forecasting, real-time monitoring of positions and the management of outgoing payments so that time-specific obligations are met.

Instant payments add hours that never close. TIPS settles on weekends and TARGET closing days, and the money for it stays on TIPS accounts while T2 is shut, so a bank has to fund those accounts in advance for the whole closed period.

Tokenized repo can raise funds within the business day. Fnality and HQLAx completed the first cross-chain intraday repo settlement in June 2024, and platforms such as HQLAx and J.P. Morgan's Onyx already process billions in repo volume, ION Group reports. Finance Loop covers the subject in tokenized collateral.

The liquidity coverage ratio asks whether a bank holds enough liquid assets for 30 days of stress. Intraday liquidity is about the hours within one day: whether money is in the right account when each payment has to leave. A bank can meet the LCR and still miss a payment deadline at noon.

From their balances at the central bank, from intraday credit that the central bank grants against collateral, from incoming payments and from credit lines with correspondent banks. In the euro area the collateral sits in the Eurosystem's collateral management system, ECMS.

The Basel Committee addressed the tools to internationally active banks. In the euro area the ECB reviews intraday liquidity risk in its supervision of the significant banks and has set out its sound practices for them. Finance Loop covers related stress testing in liquidity stress testing.