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Liquidity Policy



This policy was adopted by the Board of Directors of Armagh Credit Union
Limited.


Liquidity Policy







Signed:-


Bridie Ryan Position Chairperson



Richard Smyth Position Treasurer



Date:


1 Liquidity Risk

Liquidity risk is defined as the risk that a credit union (though solvent)
either does not have available sufficient financial resources to enable it
to meet its obligations as they fall due, or can only secure such resources
at excessive cost. Because credit unions operate with a maturity mismatch
(short-term savings and comparatively long-term loans), we are potentially
vulnerable to liquidity risk and all of the negative connotations
associated with it, especially the effect of member confidence.

Policy Objective
Armagh Credit Union's objective is to ensure that at all times we have
sufficient liquid funds to meet our day to day obligations and also to
maintain additional liquidity to meet potential obligations such as an
unexpected increased demand for savings withdrawals or loans.

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3 Policy Statement

Armagh Credit Union will always hold liquid assets of a value at least
equal to 10% of total relevant liabilities. Total relevant liabilities are
defined by us as Unattached Shares plus Minor's Deposits plus Creditors
plus Short Term Loans. Liquid assets are assets that can be realised for
cash within eight days. For the purposes of meeting this requirement,
liquid assets are valued at the amount for which they could be realised
within eight days.


4 Definition of Liquid Assets

To achieve our policy objectives, we hold the required amount in a
combination of cash, current account and short-term deposits (maximum
maturity of one week). A further 5% of total relevant liabilities are held
in short-term deposits with a maturity of not more than three months.

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Unattached shares are shares held by members in excess of those shares
being held as security against any loans they may have.

Monitoring of Liquidity Requirements
In addition to the above requirements, the Board of Directors monitors the
overall liquidity position of the credit union with a view to ensuring that
we have sufficient liquidity to deal with known increased demands for fund.
The Board does this by analysing the cash flow statement on a month by
month basis to identify trends in cash movements and using the results to
generate a forecast of future supply and demand.

Policy Review
This policy is formally reviewed on a regular basis.