Which best describes 'liquidity risk' for a bank?
ARisk of fraud
BRisk of being unable to meet short-term obligations as they fall dueCORRECT
CRisk of FX losses
DRisk of regulatory fines
CIBNBanking Principles
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Why the answer is B, and why the others tempt you.
Liquidity risk = inability to fund obligations when due — managed via liquid-asset buffers and ALM.
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