In many overseas countries the subject of bank liquidity may immediately suggest regulatory legislation. In the United Kingdom, however, apart from considerations of exchange control, the disposition of commercial bank assets is not governed by legislation. Moreover bank liquidity was not in origin a matter of legislation or regulation; the concept stems from the very essence of banking. This article therefore deals initially with this general concept of bank liquidity; it then goes on to consider the conventional statistical definition of the Liquidity Ratio.
Bank liquidity in the United Kingdom