Oireachtas Joint and Select Committees
Wednesday, 27 May 2015
Committee of Inquiry into the Banking Crisis
Nexus Phase
Mr. Con Horan:
No, no, I mean, I think the issues of solvency and liquidity are very closely related in banking. If a bank has not got sufficient, to put it at its most simple, cash to do its day-to-day business, the assets it hold will, you know, will not be sufficient to enable it and it may have to dispose of assets, etc., impacting on its solvency. Equally, if a bank has not got enough capital and enough solvency, then the markets won't lend it liquidity on a day. So the two things are very closely related. A bank that runs out of liquidity will probably fail; a bank that has not got enough capital will probably struggle to get liquidity from the market.
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