Prudential Regulation Authority Rulebook

3.1

Rule 10.5 of the Credit Unions Part of the PRA Rulebook requires that credit unions must establish, implement, and maintain an up-to-date liquidity management policy statement approved by the governing body. Rule 9.4 of the Credit Unions Part of the PRA Rulebook requires that the amount and composition of liquid assets held by a credit union must be prudent and appropriate to the nature, scale, and complexity of its business, having regard to material risks, including the risk of a sudden adverse cash flow.

3.2

The PRA therefore expects a credit union’s strategy for liquidity management, which should be set out in the liquidity management policy statement, to take account of the nature, scale, and complexity of the credit union. As part of this, it is expected that consideration should be given to the credit union’s strategic plan, risk profile, and the current economic environment. The liquidity management policy statement is also expected to cover:

• the roles and responsibilities of officers involved in liquidity management;
• the quantity and quality of liquid assets to be maintained by the credit union over time, taking into account the minimum liquidity requirements in Rule 9.2 of the Credit Unions Part of the PRA Rulebook; and
• procedures for complying with regulatory requirements, including monitoring and reporting against internal targets and regulatory ratios to the board.