To understand bank asset and liability management (ALM), sometimes called “Treasury” requires a firm grasp of what banks do and what makes them different from corporates and other types of financial institutions, including creating money, running the “so called” ledger and undertaking a number of transformations including size, maturity, credit and interest rate, alongside making payments.
Key learning objectives:
Explain and understand the prime functions that are performed by the banking system.
Examine the nature of payments and the link to a bank’s ledger
Understand the linkage from safekeeping to the lending function of a bank
Define and identify the types of maturity transformations banks make
Understand how banks actually “create” money