---
kind: "section"
citation: "12 C.F.R. § 704.9"
title: "12"
number: "704.9"
heading: "Liquidity management."
url: "https://uscodex.org/cfr/12/704.9"
---

# §704.9. Liquidity management.

- (a) **General.** In the management of liquidity, a corporate credit union must:
  - (1) Evaluate the potential liquidity needs of its membership in a variety of economic scenarios;
  - (2) Regularly monitor and demonstrate accessibility to sources of internal and external liquidity;
  - (3) Keep a sufficient amount of cash and cash equivalents on hand to support its payment system obligations;
  - (4) Demonstrate that the accounting classification of investment securities is consistent with its ability to meet potential liquidity demands; and
  - (5) Develop a contingency funding plan that addresses alternative funding strategies in successively deteriorating liquidity scenarios. The plan must:
    - (i) List all sources of liquidity, by category and amount, that are available to service an immediate outflow of funds in various liquidity scenarios;
    - (ii) Analyze the impact that potential changes in fair value will have on the disposition of assets in a variety of interest rate scenarios; and
    - (iii) Be reviewed by the board or an appropriate committee no less frequently than annually or as market or business conditions dictate.
- (b) **Borrowing limits.** A corporate credit union may borrow up to 10 times its total capital.
  - (1) **Secured borrowings.** A corporate credit union may borrow on a secured basis for liquidity purposes, but the maturity of the borrowing may not exceed 180 days. Only a corporate credit union with Tier 1 capital in excess of five percent of its moving daily average net assets (DANA) may borrow on a secured basis for nonliquidity purposes, and the outstanding amount of secured borrowing for nonliquidity purposes may not exceed an amount equal to the difference between the corporate credit union's Tier 1 capital and five percent of its moving DANA.
  - (2) **Exclusions.** CLF borrowings and borrowed funds created by the use of member reverse repurchase agreements are excluded from the limit in [paragraph (b)(1)](#b-1) of this section.

## Notes

### Amendments

[75 FR 64843, Oct. 20, 2010, as amended at 80 FR 25938, May 6, 2015]

### Authority

Authority: 12 U.S.C. 1766(a), 1781, 1789.

### Source

Source: 62 FR 12938, Mar. 19, 1997, unless otherwise noted.

### Amendments

[75 FR 64843, Oct. 20, 2010, as amended at 80 FR 25938, May 6, 2015]