Which of the following is a way in which an FI can raise liquidity?
A) Sell liquid assets.
B) Borrow funds in money markets.
C) Use excess cash reserves over and above the amount held in its exchange settlement account with the RBA.
D) All of the listed options are correct.

Question

Quizplus · Accepted Answer

All the listed options are correct ways for FIs to raise liquidity. Selling liquid assets, such as government securities or highly-rated corporate bonds, can raise cash quickly. Borrowing funds in money markets, such as through repurchase agreements or commercial paper, can provide short-term liquidity. Using excess cash reserves over and above the amount held in its exchange settlement account with the RBA can also raise liquidity, as these reserves can be invested in liquid assets or used to meet short-term funding needs. Therefore, option D is the correct choice.

Which of the Following Is a Way in Which an FI