Financial regulation and australian Dollar Liquid assets

Liquid assets play an important role in the financial system. They are generally defined as financial assets, such as cash and government securities, that can be readily used to fund payments, even in stressed market conditions. These assets are central to liquidity and credit risk management in financial markets. They are commonly used as collateral to obtain short-term funding and manage counterparty credit risks in derivatives transactions. Liquid assets, particularly those that also have low credit and market risk, are also an important asset class for a range of institutional investors, such as official sector managers of foreign exchange reserves.