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Article
Liquidity Crises: Uniquely Predictable? Lessons in Stress Testing from Citi’s Perspective
The Global Head of Rapid Stress Testing at a leading New York bank explores how recent bank failures reveal the unique nature of liquidity crises and the need for more holistic stress testing. He emphasizes moving beyond standard metrics to include real-world, idiosyncratic risks, and calls for better integration of capital and liquidity frameworks, stronger governance, and firm-wide accountability to manage future financial disruptions effectively.
Sep 05, 2025
Anindya Basu, Global Head of Rapid Stress Testing, CITIGROUP
Tags:
Stress Testing
The views and opinions expressed in this content are those of the thought leader as an individual and are not attributed to CeFPro or any other organization
- Liquidity risk often ignored until crisis hits then becomes paramount
- SVB and Credit Suisse failures had different causes but ended with liquidity crunch
- Liquidity stress testing must be proactive not just compliance
- Citi’s stress scenarios must consider rare events like cyber or geopolitical shocks
- LCR and NSFR are essential but insufficient to capture full risk picture
- Liquidity risk linked to credit market and operational risks but testing remains siloed
- Integration hindered by mismatched horizons inconsistent assumptions and governance gaps
- Need cross risk accountability and better data governance for unified stress tests
- Human judgment with proper governance complements models
- Future requires adaptive, holistic frameworks considering tech, geopolitical and digital factors
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