{"id":131973,"date":"2025-11-24T16:54:18","date_gmt":"2025-11-24T21:54:18","guid":{"rendered":"https:\/\/www.bloomberg.com\/professional\/insights\/financial-services\/how-are-bank-treasury-priorities-evolving\/"},"modified":"2026-04-27T09:50:49","modified_gmt":"2026-04-27T13:50:49","slug":"how-are-bank-treasury-priorities-evolving","status":"publish","type":[3762],"link":"https:\/\/www.bloomberg.com\/professional\/insights\/financial-services\/how-are-bank-treasury-priorities-evolving\/","title":{"rendered":"How are bank treasury priorities evolving"},"content":{"rendered":"<div  class=\"bbg-row-container\">\n    <section class=\"bbg-row  text--black row-padding--top-compact row-padding--bottom-none bbg-row--full-bg-bleed\" data-anchor='row-69ff5eda84346'>\n        \n        \n        <div\n            class=\"bbg-row--content\"\n                    >\n            \n            <p><div\n    class=\"bbg-column bbg-column--width-7\"\n    style=\"\"\n    >\n    <p><div\n    class=\"bbg-spacer bbg-spacer--lg\"\n    >\n<\/div><div\n\tclass=\"bb-wysiwyg\"\n\t\t>\n\t<p class=\"small\"><strong><span style=\"font-size: 14px; letter-spacing: 1px; color: #0062dd;\">ARTICLE<\/span><\/strong><\/p>\n\n<\/div>\n<div\n    class=\"bbg-spacer bbg-spacer--sm\"\n    >\n<\/div>    <h1 class=\"bbg-metadata bbg-metadata--title\">How are bank treasury priorities evolving<\/h1>\n<div\n    class=\"bbg-spacer\"\n        style=\"height: 50px !important\"\n    >\n<\/div>    <ul class=\"bbg-categories_list\">\n                    <li>\n                <a href=\"https:\/\/www.bloomberg.com\/professional\/insights\/category\/financial-services\/\" rel=\"category tag\">\n                    Financial Services\n                <\/a>\n            <\/li>\n                    <li>\n                <a href=\"https:\/\/www.bloomberg.com\/professional\/insights\/category\/markets\/\" rel=\"category tag\">\n                    Markets\n                <\/a>\n            <\/li>\n                    <li>\n                <a href=\"https:\/\/www.bloomberg.com\/professional\/insights\/category\/treasury\/\" rel=\"category tag\">\n                    Treasury\n                <\/a>\n            <\/li>\n            <\/ul>\n<\/p>\n\n<\/div><div\n    class=\"bbg-column bbg-column--width-5\"\n    style=\"\"\n    >\n    <div id=\"\" class=\"wpb_content_element bbg-single-image align-left\">\n    <figure class=\"bbg-single-image__figure\" style=\"max-width:100%\">\n                <img loading=\"lazy\" decoding=\"async\" width=\"1200\" height=\"800\" src=\"https:\/\/assets.bbhub.io\/image\/v1\/resize?width=auto&amp;type=webp&amp;url=https:\/\/assets.bbhub.io\/professional\/sites\/41\/4089696941.jpeg\" class=\"bbg-single-image__image attachment-full\" alt=\"Office building\" title=\"Office building\" \/>\n        \n            <\/figure>\n<\/div>\n\n\n\n<\/div>\n\n\n                    <\/div>\n    <\/section>\n<\/div>\n\n<div  class=\"bbg-row-container\">\n    <section class=\"bbg-row  text--black row-padding--top-none row-padding--bottom-none bbg-row--full-bg-bleed\" data-anchor='row-69ff5eda8f670'>\n        \n        \n        <div\n            class=\"bbg-row--content\"\n                    >\n            \n            <p><div\n    class=\"bbg-column bbg-column--width-2\"\n    style=\"\"\n    >\n    \n<\/div><div\n    class=\"bbg-column bbg-column--width-6 bbg-column--m-width-6\"\n    style=\"\"\n    >\n    <p>    <p class=\"bbg-metadata bbg-metadata--date\">November 24, 2025<\/p>\n<div\n\tclass=\"bb-wysiwyg\"\n\t\t>\n\t<p><strong>Bloomberg Professional Services<\/strong><\/p>\n\n<\/div>\n\n<\/div><div\n    class=\"bbg-column bbg-column--width-2 bbg-column--valign-middle bbg-column--m-width-2 bbg-column--s-padding-right-2\"\n    style=\"\"\n    >\n    <div class=\"bb-tts\"\n\tdata-selector=\"main\"\n\tdata-label=\"Speak this page\"\n\tdata-custom-play=\"Play\"\n\tdata-custom-pause=\"Pause\"\n\tdata-custom-stop=\"Stop\"\n\tdata-overlay=\"false\"\n\tdata-invert=\"false\"\n\tdata-no-time=\"false\"\n\tdata-no-button-text=\"false\"\n\tdata-one-button=\"true\"\n\tdata-one-style=\"true\"\n\tdata-hide-stop=\"true\"\n\tdata-voice=\"Gordon\"\n\tdata-pitch=\"1\"\n\tdata-speed=\"1\"\n\tdata-align=\"flex-start\"\n>\n<\/div>\n\n\n<\/div><div\n    class=\"bbg-column bbg-column--width-2\"\n    style=\"\"\n    >\n    \n<\/div>\n\n\n                    <\/div>\n    <\/section>\n<\/div>\n\n<div  class=\"bbg-row-container\">\n    <section class=\"bbg-row  text--black row-padding--top-none row-padding--bottom-compact bbg-row--full-bg-bleed\" data-anchor='row-69ff5eda922e6'>\n        \n        \n        <div\n            class=\"bbg-row--content\"\n                    >\n            \n            <p><div\n    class=\"bbg-column bbg-column--width-2\"\n    style=\"\"\n    >\n    \n<\/div><div\n    class=\"bbg-column bbg-column--width-8 bbg-column--has-bg-color\"\n    style=\"background-color:#e6f3ff;border-radius: 16px 16px 16px 16px;\"\n    >\n    <div class=\"wpb_content_element bbg-card  bbg-card-custom bbg-card-text-black\" id=\"card_1\" data-card_type=\"no_image\">\n      <style>#card_1 .bbg-card__innerwrapper {background-color: #e6f3ff;}#card_1 .bbg-card__innerwrapper {\n\tborder: 1px solid #e6f3ff !important;\n\t}#card_1:hover .bbg-card__innerwrapper {\n\tborder: 1px solid #e6f3ff !important;\n\t}#card_1 .bbg-card__innerwrapper {\n\tpadding: calc(var(--brand-large-padding, 40px) - 1px) !important;\n\t}#card_1 .bbg-card__innerwrapper .bbg-card__title {\n\tcolor: #000000 !important;\n\t}#card_1 .bbg-card__innerwrapper .bbg-card__content,#card_1 .bbg-card__innerwrapper .bbg-card__content p  {\n\tcolor: #000000 !important;\n\t}#card_1.bbg-card_hasImage .bbg-card__innerwrapper{padding-top: calc(var(--brand-default-padding, 16px) - 1px);padding-left: calc(var(--brand-default-padding, 16px) - 1px);padding-right: calc(var(--brand-default-padding, 16px) - 1px);}<\/style>\n  \n  \n  <div class=\"bbg-card__innerwrapper\">\n    <div class=\"bbg-card__content\">\n      \n              <div class=\"bbg-card__eyebrow\" style=\"color: #000000\">KEY TAKEAWAYS<\/div>\n      \n      \n              <div class=\"bbg-card__wysiwyg bb-wysiwyg\"><p><span class=\"TextRun SCXW112824220 BCX0\" lang=\"EN-GB\" xml:lang=\"EN-GB\" data-contrast=\"auto\"><span class=\"NormalTextRun SpellingErrorV2Themed SCXW112824220 BCX0\" data-ccp-parastyle=\"No Spacing\">How<\/span><span class=\"NormalTextRun SCXW112824220 BCX0\" data-ccp-parastyle=\"No Spacing\"> are bank treasurers adapting to regulatory reform, market volatility, and the rise of agentic AI? This article looks at how treasury and asset-liability management (ALM) functions evolve to strengthen balance sheet resilience, manage liquidity risk, and prepare for digital assets such as stablecoins<\/span><span class=\"NormalTextRun SCXW112824220 BCX0\" data-ccp-parastyle=\"No Spacing\">, <\/span><span class=\"NormalTextRun SCXW112824220 BCX0\" data-ccp-parastyle=\"No Spacing\">while<\/span> <span class=\"NormalTextRun SCXW112824220 BCX0\" data-ccp-parastyle=\"No Spacing\">maintainin<\/span><span class=\"NormalTextRun SCXW112824220 BCX0\" data-ccp-parastyle=\"No Spacing\">g<\/span><span class=\"NormalTextRun SCXW112824220 BCX0\" data-ccp-parastyle=\"No Spacing\"> governance, efficiency, and competitiveness in a<\/span><span class=\"NormalTextRun SCXW112824220 BCX0\" data-ccp-parastyle=\"No Spacing\">n evolving<\/span><span class=\"NormalTextRun SCXW112824220 BCX0\" data-ccp-parastyle=\"No Spacing\"> financial landscape.<\/span><\/span><span class=\"EOP CommentStart SCXW112824220 BCX0\" data-ccp-props=\"{&quot;201341983&quot;:0,&quot;335559739&quot;:0,&quot;335559740&quot;:240}\">\u00a0<\/span><\/p>\n<\/div>\n          <\/div>\n\n      <\/div>\n\n  <\/div>\n\n\n<\/div><div\n    class=\"bbg-column bbg-column--width-2\"\n    style=\"\"\n    >\n    \n<\/div>\n\n\n                    <\/div>\n    <\/section>\n<\/div>\n\n<div  class=\"bbg-row-container\">\n    <section class=\"bbg-row  text--black row-padding--top-compact row-padding--bottom-compact bbg-row--full-bg-bleed\" data-anchor='row-69ff5eda9524a'>\n        \n        \n        <div\n            class=\"bbg-row--content\"\n                    >\n            \n            <p><div\n    class=\"bbg-column bbg-column--width-2\"\n    style=\"\"\n    >\n    \n<\/div><div\n    class=\"bbg-column bbg-column--width-8\"\n    style=\"\"\n    >\n    <p><div\n\tclass=\"bb-wysiwyg\"\n\t\t>\n\t<p><em><span class=\"TextRun SCXW6078794 BCX0\" lang=\"EN-GB\" xml:lang=\"EN-GB\" data-contrast=\"none\"><span class=\"NormalTextRun SCXW6078794 BCX0\" data-ccp-parastyle=\"No Spacing\">This article was <\/span><\/span><span class=\"TextRun SCXW6078794 BCX0\" lang=\"EN-GB\" xml:lang=\"EN-GB\" data-contrast=\"none\"><span class=\"NormalTextRun SCXW6078794 BCX0\" data-ccp-parastyle=\"No Spacing\">written by Moorad Choudhry, Founder, at Bank Treasury Risk Management (BTRM), with contribution from <\/span><span class=\"NormalTextRun CommentStart SCXW6078794 BCX0\" data-ccp-parastyle=\"No Spacing\">Andre Pereira,<\/span> <\/span><span class=\"TextRun SCXW6078794 BCX0\" lang=\"EN-GB\" xml:lang=\"EN-GB\" data-contrast=\"auto\"><span class=\"NormalTextRun SCXW6078794 BCX0\" data-ccp-parastyle=\"No Spacing\">Product Manager, Bank Treasury, Enterprise Risk Solutions at Bloomberg.<\/span><\/span><span class=\"EOP SCXW6078794 BCX0\" data-ccp-props=\"{&quot;201341983&quot;:0,&quot;335559739&quot;:0,&quot;335559740&quot;:240}\">\u00a0<\/span><\/em><\/p>\n\n<\/div>\n<div\n\tclass=\"bb-wysiwyg\"\n\t\t>\n\t<p><span data-contrast=\"auto\">If ever there was a time when bank treasury functions operated in a stable, uncontroversial environment, that time passed many years ago. Today, treasurers and asset-liability management (ALM) desks are faced with a myriad of challenges, which paradoxically also present opportunities for gaining competitive advantage.\u00a0<\/span><span data-ccp-props=\"{&quot;201341983&quot;:0,&quot;335559739&quot;:0,&quot;335559740&quot;:240}\">\u00a0<\/span><\/p>\n<p><span data-contrast=\"auto\">In an industry experiencing regulatory complexity, new fintech entrants and a volatile rates cycle, banks able to achieve an optimised balance sheet structure \u2013 addressing the requirements of all stakeholders \u2013 will be ahead of the game.<\/span><span data-ccp-props=\"{&quot;201341983&quot;:0,&quot;335559739&quot;:0,&quot;335559740&quot;:240}\">\u00a0<\/span><\/p>\n\n<\/div>\n\n<\/div>\n\n\n                    <\/div>\n    <\/section>\n<\/div>\n\n<div  class=\"bbg-row-container\">\n    <section class=\"bbg-row  text--black row-padding--top-none row-padding--bottom-none bbg-row--full-bg-bleed\" data-anchor='row-69ff5eda96e52'>\n        \n        \n        <div\n            class=\"bbg-row--content\"\n                    >\n            \n            <p><div\n    class=\"bbg-column bbg-column--width-3\"\n    style=\"\"\n    >\n    <p><div\n    class=\"bbg-spacer bbg-spacer--sm\"\n    >\n<\/div><hr class=\"bbg-separator bbg-separator-1\" style=\"height:1px;\" \/>\n<div\n    class=\"bbg-spacer\"\n        style=\"height: 32px !important\"\n    >\n<\/div><div\n\tclass=\"bb-wysiwyg\"\n\t\t>\n\t<p class=\"small\"><strong><span style=\"font-size: 14px; letter-spacing: 1px;\">PRODUCT MENTIONS<\/span><\/strong><\/p>\n\n<\/div>\n\n<div\n  id=\"cta_498202505799679717\"\n  class=\"wpb_content_element bbg-cta no-icon\">\n  <style>\n    \n    \n    \n  <\/style>\n  <div\n    class=\"bbg-cta-link link-holder\"\n    data-links-type=\"cta-links\">\n    <p class=\"bbg-cta-p left\">\n      <a\n        class=\"bbg-cta-link link\"\n        href=\"https:\/\/professional.bloomberg.com\/explore\/bank-treasury-and-risk-workflows\/\"\n        target=\"\"\n        rel=\"\"\n        data-section-name=\"Bloomberg Bank Treasury and Risk Solutions\"\n        >\n                      Bloomberg Bank Treasury and Risk Solutions\n                <\/a>\n    <\/p>\n  <\/div>\n<\/div>\n<div\n    class=\"bbg-spacer bbg-spacer--sm\"\n    >\n<\/div><div\n    class=\"bbg-spacer\"\n        style=\"height: 32px !important\"\n    >\n<\/div><hr class=\"bbg-separator bbg-separator-1\" style=\"height:1px;\" \/>\n<\/p>\n\n<\/div><div\n    class=\"bbg-column bbg-column--width-1\"\n    style=\"\"\n    >\n    \n<\/div><div\n    class=\"bbg-column bbg-column--width-6\"\n    style=\"\"\n    >\n    <div\n\tclass=\"bb-wysiwyg\"\n\t\t>\n\t<h2><span class=\"TextRun SCXW239470489 BCX0\" lang=\"EN-GB\" xml:lang=\"EN-GB\" data-contrast=\"none\"><span class=\"NormalTextRun CommentStart SCXW239470489 BCX0\" data-ccp-parastyle=\"heading 2\">How are regulation and digital assets reshaping bank treasury strategy?<\/span><\/span><span class=\"EOP SCXW239470489 BCX0\" data-ccp-props=\"{&quot;134245418&quot;:true,&quot;134245529&quot;:true,&quot;335559738&quot;:160,&quot;335559739&quot;:80}\">\u00a0<\/span><\/h2>\n\n<\/div>\n<div\n\tclass=\"bb-wysiwyg\"\n\t\t>\n\t<p><span data-contrast=\"auto\">Regulation provides the baseline compliance requirement for all Treasury teams. The Basel post-crisis reforms first published in 2010 remain to be fully implemented in all jurisdictions. The banking landscape has already undergone significant transformation during this period; will it be time for \u201cBasel V\u201d by then? <\/span><span data-ccp-props=\"{&quot;201341983&quot;:0,&quot;335559739&quot;:0,&quot;335559740&quot;:240}\">\u00a0<\/span><\/p>\n<p><span data-contrast=\"auto\">In addition, the emergence of \u201cdigital\u201d asset classes, particularly stablecoins, is an area that banks must prepare a strategy for sooner rather than later. <\/span><span data-ccp-props=\"{&quot;201341983&quot;:0,&quot;335559739&quot;:0,&quot;335559740&quot;:240}\">\u00a0<\/span><\/p>\n\n<\/div>\n\n<\/div><div\n    class=\"bbg-column bbg-column--width-2\"\n    style=\"\"\n    >\n    \n<\/div>\n\n\n                    <\/div>\n    <\/section>\n<\/div>\n\n<div  class=\"bbg-row-container\">\n    <section class=\"bbg-row  text--black row-padding--top-none row-padding--bottom-none bbg-row--margin-top-compact bbg-row--margin-bottom-compact bbg-row--full-bg-bleed\" data-anchor='row-69ff5eda9a883'>\n        \n        \n        <div\n            class=\"bbg-row--content\"\n                    >\n            \n            <div\n    class=\"bbg-column\"\n    style=\"\"\n    >\n    <div class=\"bbg-interstitial\" aria-label=\"interstitial\" tabindex=\"0\">\n\t<style>\n\t\t.bbg-interstitial #card_2.bbg-card_hasCta{\n\t\t\tbackground: url(https:\/\/assets.bbhub.io\/image\/v1\/resize?width=auto&amp;type=webp&amp;url=https:\/\/assets.bbhub.io\/professional\/sites\/41\/Interstitial_bg.png);\n\t\t\t\tbackground-repeat: no-repeat;\n\t\t\t\tbackground-position: center center;\n\t\t\t\tbackground-size: cover;\n\t\t\tpadding: 104px;\n\t\t\t\n\t\t\t\n\t\t}\n\t\t.bbg-interstitial #card_2.bbg-card_hasCta .bbg-card__content, .bbg-interstitial #card_2.bbg-card_hasCta .bbg-card__content p{\n\t\t\tcolor:white;\n\t\t}\n\t\t@media (max-width: 768px) {\n\t\t\t.bbg-interstitial #card_2.bbg-card_hasCta{\n\t\t\t\tpadding: 80px 32px;\n\t\t\t}\n\t\t}\n\t\t@media (max-width: 480px) {\n\t\t\t.bbg-interstitial #card_2.bbg-card_hasCta{\n\t\t\t\tpadding: 80px 18px;\n\t\t\t}\n\t\t}\n\t<\/style>\n\t<div class=\"wpb_content_element bbg-card  bbg-card-dark bbg-card_hasCta has_interstitial\" id=\"card_2\" data-card_type=\"no_image\">\n  \n  \n  <div class=\"bbg-card__innerwrapper\">\n    <div class=\"bbg-card__content\">\n      \n      \n                      <h3 class=\"bbg-card__title\">Discover more with Bloomberg newsletters<\/h3>\n      \n              <div class=\"bbg-card__wysiwyg bb-wysiwyg\"><p>Subscribe now<\/p>\n<\/div>\n          <\/div>\n\n          \n<div\n  id=\"cta_2982976948834536562\"\n  class=\"wpb_content_element bbg-cta icon icon-arrow\">\n  <style>\n    \n    \n    \n  <\/style>\n  <div\n    class=\"bbg-cta-link link-holder\"\n    data-links-type=\"cta-links\">\n    <p class=\"bbg-cta-p right\">\n      <a\n        class=\"bbg-cta-link link interstitial_cta\"\n        href=\"https:\/\/www.bloomberg.com\/professional\/insights\/newsletter\/\"\n        target=\"\"\n        rel=\"\"\n        data-section-name=\"\"\n                role=\"button\"\n        aria-label=\"Learn more\"\n        >\n                <\/a>\n    <\/p>\n  <\/div>\n<\/div>\n\n      <\/div>\n\n  <\/div>\n\n<\/div>\n\n\n<\/div>\n\n\n                    <\/div>\n    <\/section>\n<\/div>\n\n<div  class=\"bbg-row-container\">\n    <section class=\"bbg-row  text--black row-padding--top-compact row-padding--bottom-none bbg-row--full-bg-bleed\" data-anchor='row-69ff5eda9d912'>\n        \n        \n        <div\n            class=\"bbg-row--content\"\n                    >\n            \n            <p><div\n    class=\"bbg-column bbg-column--width-2\"\n    style=\"\"\n    >\n    \n<\/div><div\n    class=\"bbg-column bbg-column--width-8\"\n    style=\"\"\n    >\n    <p><div\n\tclass=\"bb-wysiwyg\"\n\t\t>\n\t<p><span class=\"TextRun SCXW237590979 BCX0\" lang=\"EN-GB\" xml:lang=\"EN-GB\" data-contrast=\"auto\"><span class=\"NormalTextRun SCXW237590979 BCX0\" data-ccp-parastyle=\"No Spacing\">Some are already there: the announcement last month by nine banks in the eurozone that they were launching <\/span><span class=\"NormalTextRun SCXW237590979 BCX0\" data-ccp-parastyle=\"No Spacing\">a EUR-denominated stablecoins was instructive. Currently, 99% of all stablecoins are backed by USD assets. <\/span><span class=\"NormalTextRun SCXW237590979 BCX0\" data-ccp-parastyle=\"No Spacing\">Given t<\/span><span class=\"NormalTextRun SCXW237590979 BCX0\" data-ccp-parastyle=\"No Spacing\">hat regulators have not issued detailed guidance yet on how such assets should be treated on the balance sheet for ALM-related purposes adds to the challenge for banks.<\/span><\/span><span class=\"EOP SCXW237590979 BCX0\" data-ccp-props=\"{&quot;201341983&quot;:0,&quot;335559739&quot;:0,&quot;335559740&quot;:240}\">\u00a0<\/span><\/p>\n\n<\/div>\n<div\n\tclass=\"bb-wysiwyg\"\n\t\t>\n\t<p><span class=\"TextRun SCXW141187308 BCX0\" lang=\"EN-GB\" xml:lang=\"EN-GB\" data-contrast=\"auto\"><span class=\"NormalTextRun SCXW141187308 BCX0\" data-ccp-parastyle=\"No Spacing\">The perennial issue of liquidity ri<\/span><span class=\"NormalTextRun SCXW141187308 BCX0\" data-ccp-parastyle=\"No Spacing\">s<\/span><span class=\"NormalTextRun SCXW141187308 BCX0\" data-ccp-parastyle=\"No Spacing\">k management is just that \u2013 perennial. As the <\/span><span class=\"NormalTextRun SCXW141187308 BCX0\" data-ccp-parastyle=\"No Spacing\">bank <\/span><span class=\"NormalTextRun SCXW141187308 BCX0\" data-ccp-parastyle=\"No Spacing\">failures<\/span><span class=\"NormalTextRun SCXW141187308 BCX0\" data-ccp-parastyle=\"No Spacing\"> of 2023 showed, <\/span><span class=\"NormalTextRun SCXW141187308 BCX0\" data-ccp-parastyle=\"No Spacing\">it\u2019s<\/span><span class=\"NormalTextRun SCXW141187308 BCX0\" data-ccp-parastyle=\"No Spacing\"> still possible <\/span><span class=\"NormalTextRun SCXW141187308 BCX0\" data-ccp-parastyle=\"No Spacing\">for banks <\/span><span class=\"NormalTextRun SCXW141187308 BCX0\" data-ccp-parastyle=\"No Spacing\">to fail <\/span><span class=\"NormalTextRun SCXW141187308 BCX0\" data-ccp-parastyle=\"No Spacing\">because <\/span><span class=\"NormalTextRun SCXW141187308 BCX0\" data-ccp-parastyle=\"No Spacing\">of<\/span> <span class=\"NormalTextRun CommentHighlightPipeRest SCXW141187308 BCX0\" data-ccp-parastyle=\"No Spacing\">mismanagement<\/span><span class=\"NormalTextRun SCXW141187308 BCX0\" data-ccp-parastyle=\"No Spacing\"> of liquidity<\/span><span class=\"NormalTextRun SCXW141187308 BCX0\" data-ccp-parastyle=\"No Spacing\"> risk<\/span><span class=\"NormalTextRun SCXW141187308 BCX0\" data-ccp-parastyle=\"No Spacing\"> exposure (and of course, interest-rate risk exposure). But what will the next stress event look like? <\/span><\/span><\/p>\n<p><span class=\"TextRun SCXW141187308 BCX0\" lang=\"EN-GB\" xml:lang=\"EN-GB\" data-contrast=\"auto\"><span class=\"NormalTextRun SCXW141187308 BCX0\" data-ccp-parastyle=\"No Spacing\">This is a classic \u201cunknown unknown\u201d: will bank liquidity risk processes be up to handling it? Silicon Valley Bank and First Republic <\/span><span class=\"NormalTextRun SCXW141187308 BCX0\" data-ccp-parastyle=\"No Spacing\">Bank were classic examples of failure for what the UK regulator termed \u201cPillar 2 liquidity\u201d. Their balance sheets <\/span><span class=\"NormalTextRun SCXW141187308 BCX0\" data-ccp-parastyle=\"No Spacing\">exhibited<\/span><span class=\"NormalTextRun SCXW141187308 BCX0\" data-ccp-parastyle=\"No Spacing\"> extreme concentration. This concentration manifested itself in three ways:<\/span><\/span><span class=\"EOP SCXW141187308 BCX0\" data-ccp-props=\"{&quot;201341983&quot;:0,&quot;335559739&quot;:0,&quot;335559740&quot;:240}\">\u00a0<\/span><\/p>\n<ol>\n<li aria-setsize=\"-1\" data-leveltext=\"%1.\" data-font=\"\" data-listid=\"16\" data-list-defn-props=\"{&quot;335552541&quot;:0,&quot;335559685&quot;:720,&quot;335559991&quot;:360,&quot;469769242&quot;:&#091;65533,0&#093;,&quot;469777803&quot;:&quot;left&quot;,&quot;469777804&quot;:&quot;%1.&quot;,&quot;469777815&quot;:&quot;hybridMultilevel&quot;}\" data-aria-posinset=\"1\" data-aria-level=\"1\"><span data-contrast=\"auto\">Concentration by customer type;<\/span><\/li>\n<li aria-setsize=\"-1\" data-leveltext=\"%1.\" data-font=\"\" data-listid=\"16\" data-list-defn-props=\"{&quot;335552541&quot;:0,&quot;335559685&quot;:720,&quot;335559991&quot;:360,&quot;469769242&quot;:&#091;65533,0&#093;,&quot;469777803&quot;:&quot;left&quot;,&quot;469777804&quot;:&quot;%1.&quot;,&quot;469777815&quot;:&quot;hybridMultilevel&quot;}\" data-aria-posinset=\"1\" data-aria-level=\"1\"><span data-contrast=\"auto\">Concentration by product type;<\/span><span data-ccp-props=\"{&quot;201341983&quot;:0,&quot;335559739&quot;:0,&quot;335559740&quot;:240}\">\u00a0<\/span><\/li>\n<li aria-setsize=\"-1\" data-leveltext=\"%1.\" data-font=\"\" data-listid=\"16\" data-list-defn-props=\"{&quot;335552541&quot;:0,&quot;335559685&quot;:720,&quot;335559991&quot;:360,&quot;469769242&quot;:&#091;65533,0&#093;,&quot;469777803&quot;:&quot;left&quot;,&quot;469777804&quot;:&quot;%1.&quot;,&quot;469777815&quot;:&quot;hybridMultilevel&quot;}\" data-aria-posinset=\"1\" data-aria-level=\"1\"><span data-contrast=\"auto\">Concentration by contractual tenor.<\/span><span data-ccp-props=\"{&quot;201341983&quot;:0,&quot;335559739&quot;:0,&quot;335559740&quot;:240}\">\u00a0<\/span><\/li>\n<\/ol>\n<p><span class=\"TextRun SCXW106801778 BCX0\" lang=\"EN-GB\" xml:lang=\"EN-GB\" data-contrast=\"auto\"><span class=\"NormalTextRun SCXW106801778 BCX0\" data-ccp-parastyle=\"No Spacing\">In the absence of any forewarning of the <\/span><span class=\"NormalTextRun SCXW106801778 BCX0\" data-ccp-parastyle=\"No Spacing\">likely <\/span><span class=\"NormalTextRun SCXW106801778 BCX0\" data-ccp-parastyle=\"No Spacing\">form<\/span><span class=\"NormalTextRun SCXW106801778 BCX0\" data-ccp-parastyle=\"No Spacing\"> of the next stress scenario, <\/span><span class=\"NormalTextRun SCXW106801778 BCX0\" data-ccp-parastyle=\"No Spacing\">what <\/span><span class=\"NormalTextRun SCXW106801778 BCX0\" data-ccp-parastyle=\"No Spacing\">banks can (and should) do is to remain conservative in their funding risk management outlook and structure the balance sheet accordingly. <\/span><span class=\"NormalTextRun SCXW106801778 BCX0\" data-ccp-parastyle=\"No Spacing\">That is one risk type where the appetite for exposure must be low.<\/span><\/span><span class=\"EOP SCXW106801778 BCX0\" data-ccp-props=\"{&quot;201341983&quot;:0,&quot;335559739&quot;:0,&quot;335559740&quot;:240}\">\u00a0<\/span><\/p>\n<p><span class=\"TextRun SCXW12393956 BCX0\" lang=\"EN-GB\" xml:lang=\"EN-GB\" data-contrast=\"auto\"><span class=\"NormalTextRun CommentStart SCXW12393956 BCX0\">There<\/span><span class=\"NormalTextRun SCXW12393956 BCX0\"> is also<\/span><span class=\"NormalTextRun SCXW12393956 BCX0\"> another structural consideration on the horizon. With the evolution of stablecoins into potential central bank digital currencies (CBDCs), the traditional deposit base could gradually migrate to central bank balance sheets. This could reshape the liability side of the commercial bank balance sheet entirely.\u00a0<\/span><\/span><span class=\"EOP SCXW12393956 BCX0\" data-ccp-props=\"{&quot;335559738&quot;:240,&quot;335559739&quot;:240}\">\u00a0<\/span><\/p>\n\n<\/div>\n<div\n\tclass=\"bb-wysiwyg\"\n\t\t>\n\t<h2><span class=\"TextRun SCXW6679333 BCX0\" lang=\"EN-GB\" xml:lang=\"EN-GB\" data-contrast=\"none\"><span class=\"NormalTextRun SCXW6679333 BCX0\" data-ccp-parastyle=\"heading 2\">How will a<\/span><span class=\"NormalTextRun CommentStart SCXW6679333 BCX0\" data-ccp-parastyle=\"heading 2\">gentic AI <\/span><span class=\"NormalTextRun SCXW6679333 BCX0\" data-ccp-parastyle=\"heading 2\">transform ALM decision-making?<\/span><\/span><span class=\"EOP SCXW6679333 BCX0\" data-ccp-props=\"{&quot;134245418&quot;:true,&quot;134245529&quot;:true,&quot;335559738&quot;:160,&quot;335559739&quot;:80}\">\u00a0<\/span><\/h2>\n\n<\/div>\n<div\n\tclass=\"bb-wysiwyg\"\n\t\t>\n\t<p><span data-contrast=\"auto\">Another consideration is the rise of AI which is set to impact banks and Bank Treasury teams as much as any other industry, and likely more than most. As experts during recent Bloomberg Enterprise Tech &amp; Data Summit in New York stated, <\/span><a href=\"https:\/\/www.bloomberg.com\/professional\/insights\/markets\/how-is-investment-research-transformed-by-ai\/\"><span data-contrast=\"none\">AI is already changing the way investment research companies operate<\/span><\/a><span data-contrast=\"auto\">. <\/span><span data-ccp-props=\"{&quot;201341983&quot;:0,&quot;335559739&quot;:0,&quot;335559740&quot;:240}\">\u00a0<\/span><\/p>\n<p><span data-contrast=\"auto\">Zooming in on b<\/span><span data-contrast=\"auto\">ank <\/span><span data-contrast=\"auto\">t<\/span><span data-contrast=\"auto\">reasury, what can we expect the core ALM process to look like once systems capable of autonomously perceiving, reasoning, and taking actions to achieve goals known as agentic AI, becomes mainstream? <\/span><span data-ccp-props=\"{&quot;201341983&quot;:0,&quot;335559739&quot;:0,&quot;335559740&quot;:240}\">\u00a0<\/span><\/p>\n<p><span data-contrast=\"auto\">AI is already in use across varied applications in the finance industry. We expect that those employed in Treasury and ALM disciplines will see, or are seeing now, the following changes:<\/span><span data-ccp-props=\"{&quot;201341983&quot;:0,&quot;335559739&quot;:0,&quot;335559740&quot;:240}\">\u00a0<\/span><\/p>\n<ul>\n<li aria-setsize=\"-1\" data-leveltext=\"\uf0b7\" data-font=\"Symbol\" data-listid=\"17\" data-list-defn-props=\"{&quot;335552541&quot;:1,&quot;335559685&quot;:360,&quot;335559991&quot;:360,&quot;469769226&quot;:&quot;Symbol&quot;,&quot;469769242&quot;:&#091;8226&#093;,&quot;469777803&quot;:&quot;left&quot;,&quot;469777804&quot;:&quot;\uf0b7&quot;,&quot;469777815&quot;:&quot;hybridMultilevel&quot;}\" data-aria-posinset=\"1\" data-aria-level=\"1\"><span data-contrast=\"auto\">Some banks have adopted agentic AI already, in processes including fraud detection and know your customer (KYC) onboarding.\u00a0<\/span><span data-ccp-props=\"{&quot;201341983&quot;:0,&quot;335559739&quot;:0,&quot;335559740&quot;:240}\">\u00a0<\/span><\/li>\n<\/ul>\n<ul>\n<li aria-setsize=\"-1\" data-leveltext=\"\uf0b7\" data-font=\"Symbol\" data-listid=\"17\" data-list-defn-props=\"{&quot;335552541&quot;:1,&quot;335559685&quot;:360,&quot;335559991&quot;:360,&quot;469769226&quot;:&quot;Symbol&quot;,&quot;469769242&quot;:&#091;8226&#093;,&quot;469777803&quot;:&quot;left&quot;,&quot;469777804&quot;:&quot;\uf0b7&quot;,&quot;469777815&quot;:&quot;hybridMultilevel&quot;}\" data-aria-posinset=\"2\" data-aria-level=\"1\"><span data-contrast=\"auto\">Use of agentic AI in additional areas such as customer experience and product origination will reduce costs, and, theoretically at least, increase efficiency.\u00a0<\/span><span data-ccp-props=\"{&quot;201341983&quot;:0,&quot;335559739&quot;:0,&quot;335559740&quot;:240}\">\u00a0<\/span><\/li>\n<\/ul>\n<ul>\n<li aria-setsize=\"-1\" data-leveltext=\"\uf0b7\" data-font=\"Symbol\" data-listid=\"17\" data-list-defn-props=\"{&quot;335552541&quot;:1,&quot;335559685&quot;:360,&quot;335559991&quot;:360,&quot;469769226&quot;:&quot;Symbol&quot;,&quot;469769242&quot;:&#091;8226&#093;,&quot;469777803&quot;:&quot;left&quot;,&quot;469777804&quot;:&quot;\uf0b7&quot;,&quot;469777815&quot;:&quot;hybridMultilevel&quot;}\" data-aria-posinset=\"3\" data-aria-level=\"1\"><span data-contrast=\"auto\">Most consequential, is the point at which banks begin delegating strategic-level decisions to AI.<\/span><span data-ccp-props=\"{&quot;201341983&quot;:0,&quot;335559739&quot;:0,&quot;335559740&quot;:240}\">\u00a0<\/span><\/li>\n<\/ul>\n<p><span data-contrast=\"auto\">This has significant implications for Treasury, and crucially the bank\u2019s ALM Committee (ALCO). As <\/span><a href=\"https:\/\/www.bloomberg.com\/professional\/insights\/artificial-intelligence\/banks-enter-agentic-ai-era-as-tech-race-heats-up-roi-in-focus\/\"><span data-contrast=\"none\">Bloomberg Intelligence analysis shows<\/span><\/a><span data-contrast=\"auto\"> governance is one of the central themes of banks shifting towards agentic AI.\u201d. From the ALCO perspective, accurate and up-to-the-minute balance sheet reporting will always remain paramount: to enable effective decision making on ALM-related matters requires real-time ALM risk reporting and touch-of-a-button stress testing. We expect that for those banks that adopt it for these purposes, agentic AI will be a game changer.<\/span><span data-ccp-props=\"{&quot;201341983&quot;:0,&quot;335559739&quot;:0,&quot;335559740&quot;:240}\">\u00a0<\/span><\/p>\n<p><span class=\"NormalTextRun CommentStart SCXW266611877 BCX0\">Notably<\/span><span class=\"NormalTextRun SCXW266611877 BCX0\">, t<\/span><span class=\"NormalTextRun SCXW266611877 BCX0\">he implications for ALM go far beyond automation. The very foundation of <\/span><span class=\"NormalTextRun SCXW266611877 BCX0\">T<\/span><span class=\"NormalTextRun SCXW266611877 BCX0\">reasury analytics (behavioral modelling of non-amenable positions and dynamic balance sheet projections for net interest income) relies on regression and statistical inference.<\/span><\/p>\n<p><span class=\"TextRun SCXW266611877 BCX0\" lang=\"EN-GB\" xml:lang=\"EN-GB\" data-contrast=\"auto\"><span class=\"NormalTextRun SCXW266611877 BCX0\">Agentic AI is uniquely suited to elevate this by uncovering complex, non-linear relationships within macroeconomic and market data that humans may not easily discern. In time, this could enable continuous, on-demand balance sheet optimisation and more precise scenario forecasting, transforming ALM into a genuinely adaptive and predictive discipline.<\/span><\/span><\/p>\n\n<\/div>\n<div\n\tclass=\"bb-wysiwyg\"\n\t\t>\n\t<h2><span class=\"TextRun SCXW153679138 BCX0\" lang=\"EN-GB\" xml:lang=\"EN-GB\" data-contrast=\"none\"><span class=\"NormalTextRun SCXW153679138 BCX0\" data-ccp-parastyle=\"heading 2\">Balancing innovation and governance in treasury risk management<\/span><\/span><span class=\"EOP SCXW153679138 BCX0\" data-ccp-props=\"{&quot;134245418&quot;:true,&quot;134245529&quot;:true,&quot;335559738&quot;:160,&quot;335559739&quot;:80}\">\u00a0<\/span><\/h2>\n\n<\/div>\n<div\n\tclass=\"bb-wysiwyg\"\n\t\t>\n\t<p aria-level=\"2\"><span data-ccp-props=\"{&quot;134245418&quot;:true,&quot;134245529&quot;:true,&quot;335559738&quot;:160,&quot;335559739&quot;:80}\">\u00a0<\/span><span data-contrast=\"auto\">Today there are a large number of issues and risks for Treasury to manage<\/span><span data-contrast=\"auto\">, and<\/span><span data-contrast=\"auto\"> it can be difficult to know where to start. There are the more technical topics such as Pillar 2 liquidity and interest-rate risk in the banking book (IRRBB); there are also areas where the industry is evolving so quickly <\/span><span data-contrast=\"auto\">that <\/span><span data-contrast=\"auto\">it may be more advantageous to eschew \u201cfirst mover advantage\u201d and observe how things develop. <\/span><\/p>\n<p aria-level=\"2\"><span data-contrast=\"auto\">The traditional pillars of sound risk management remain essential. Good governance, underpinned by the ALCO framework, and a good risk culture will, ultimately, prevail in an environment of <\/span><span data-contrast=\"auto\">market <\/span><span data-contrast=\"auto\">uncertainty and geopolitical tension.<\/span><span data-ccp-props=\"{&quot;201341983&quot;:0,&quot;335559739&quot;:0,&quot;335559740&quot;:240}\">\u00a0<\/span><\/p>\n\n<\/div>\n<div\n\tclass=\"bb-wysiwyg\"\n\t\t>\n\t<p><span class=\"TextRun SCXW114526910 BCX0\" lang=\"EN-GB\" xml:lang=\"EN-GB\" data-contrast=\"auto\"><span class=\"NormalTextRun SCXW114526910 BCX0\" data-ccp-parastyle=\"No Spacing\">To learn more about Bloo<\/span><span class=\"NormalTextRun SCXW114526910 BCX0\" data-ccp-parastyle=\"No Spacing\">mberg <\/span><span class=\"NormalTextRun SCXW114526910 BCX0\" data-ccp-parastyle=\"No Spacing\">Bank <\/span><span class=\"NormalTextRun SCXW114526910 BCX0\" data-ccp-parastyle=\"No Spacing\">Treasury <\/span><span class=\"NormalTextRun SCXW114526910 BCX0\" data-ccp-parastyle=\"No Spacing\">and<\/span><span class=\"NormalTextRun SCXW114526910 BCX0\" data-ccp-parastyle=\"No Spacing\"> Risk <\/span><span class=\"NormalTextRun SCXW114526910 BCX0\" data-ccp-parastyle=\"No Spacing\">solutions <\/span><\/span><a class=\"Hyperlink SCXW114526910 BCX0\" href=\"https:\/\/professional.bloomberg.com\/explore\/bank-treasury-and-risk-workflows\/\" target=\"_blank\" rel=\"noreferrer noopener\"><span class=\"TextRun Underlined SCXW114526910 BCX0\" lang=\"EN-GB\" xml:lang=\"EN-GB\" data-contrast=\"none\"><span class=\"NormalTextRun SCXW114526910 BCX0\" data-ccp-charstyle=\"Hyperlink\">click<\/span><\/span><\/a><span class=\"TextRun Underlined SCXW114526910 BCX0\" lang=\"EN-GB\" xml:lang=\"EN-GB\" data-contrast=\"none\"><span class=\"NormalTextRun CommentStart SCXW114526910 BCX0\" data-ccp-charstyle=\"Hyperlink\"> here<\/span><\/span><span class=\"EOP SCXW114526910 BCX0\" data-ccp-props=\"{&quot;201341983&quot;:0,&quot;335559739&quot;:0,&quot;335559740&quot;:240}\">\u00a0<\/span><\/p>\n\n<\/div>\n<div class=\"bbg-accordion transparent\">\n\t<input type=\"checkbox\"  id=\"bbg-accordion-toggle-69ff5edaa0f87\">\n\t<div class=\"bbg-accordion-parent\" data-accordion-toggle aria-expanded=\"false\">\n\t\t<label class=\"bbg-accordion-label\" for=\"bbg-accordion-toggle-69ff5edaa0f87\">\n\t\t\t\t<h5 class=\"bbg-accordion-title\" data-label=\"Disclamier\">\n\t\tDisclamier\n\t<\/h5>\n\n\t\t\t\t\t<\/label>\n\t<\/div>\n\t<div class=\"bbg-accordion-content\">\n\t\t<div class=\"bb-wysiwyg\">\n\t<p><span class=\"TextRun SCXW128932890 BCX0\" lang=\"EN-GB\" xml:lang=\"EN-GB\" data-contrast=\"auto\"><span class=\"NormalTextRun SCXW128932890 BCX0\">The information and data included in these materials are for illustrative purp<\/span><span class=\"NormalTextRun CommentStart CommentHighlightPipeRest CommentHighlightRest SCXW128932890 BCX0\">oses only.<\/span><span class=\"NormalTextRun CommentHighlightPipeRest SCXW128932890 BCX0\"> The BLOOMBERG TERMINAL service and Bloomberg data products (the \u201cServices\u201d) are owned and distributed by Bloomberg Finance L.P. (\u201cBFLP\u201d) except (<\/span><span class=\"NormalTextRun SpellingErrorV2Themed SCXW128932890 BCX0\">i<\/span><span class=\"NormalTextRun SCXW128932890 BCX0\">) in Argentina, Australia and certain jurisdictions in the Pacific islands, Bermuda, China, India, Japan, Korea and New Zealand, where Bloomberg L.P. and its subsidiaries (\u201cBLP\u201d) distribute these products, and (ii) in Singapore and the jurisdictions serviced by Bloomberg\u2019s Singapore office, where a subsidiary of BFLP distributes these products. BLP or one of its subsidiaries provides BFLP and its subsidiaries with global marketing and operational support and service. 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Nothing in the Services shall constitute or be construed as an offering of financial instruments by BFLP, BLP or their affiliates, or as investment advice or recommendations by BFLP, BLP or their affiliates of an investment strategy or <\/span><span class=\"NormalTextRun AdvancedProofingIssueV2Themed SCXW128932890 BCX0\">whether or not<\/span><span class=\"NormalTextRun SCXW128932890 BCX0\"> to \u201cbuy<\/span><span class=\"NormalTextRun SCXW128932890 BCX0\">\u201d,<\/span><span class=\"NormalTextRun SCXW128932890 BCX0\"> \u201csell\u201d or \u201chold\u201d an investment. Information available via the Services should not be considered as information sufficient upon which to base an investment decision. The following are trademarks and service marks of BFLP, a Delaware limited partnership, or its subsidiaries: BLOOMBERG, BLOOMBERG ANYWHERE, BLOOMBERG MARKETS, BLOOMBERG NEWS, BLOOMBERG PROFESSIONAL, BLOOMBERG TERMINAL and BLOOMBERG.COM. Absence of any trademark or service mark from this list does not waive Bloomberg\u2019s intellectual property rights in that name, <\/span><span class=\"NormalTextRun SCXW128932890 BCX0\">mark<\/span><span class=\"NormalTextRun SCXW128932890 BCX0\"> or logo. 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