This statement of policy (SoP) is relevant to all UK banks, building societies and PRA-designated investment firms, referred to collectively as ‘firms’.
- Chapter 2 details the PRA’s approach to the level of application of Pillar 2 liquidity guidance.
- Chapter 3 details the PRA’s approach to assessing cashflow mismatch risk.
- Chapter 4 details the PRA’s approach to assessing franchise viability risks.
- Chapter 5 details the PRA’s approach to assessing intraday liquidity risks.
- Chapter 6 details the PRA’s approach to assessing other Pillar 2 liquidity risks.
The Pillar 2 framework covers risks not captured, or not fully captured, in Pillar 1.
In publishing its approach to Pillar 2 liquidity (‘Pillar 2’), the PRA seeks to help firms understand how it assesses liquidity risks, thereby encouraging them to develop better approaches to reduce or manage these risks.