# 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) of this section.
[75 FR 64843, Oct. 20, 2010, as amended at 80 FR 25938, May 6, 2015]