This study guide was written by Joachim Bald, working under the auspices of Bankakademie, Frankfurt, for Deutsche Gesellschaft für Technische Zusammenarbeit (gtz), Eschborn/ Germany. It is designed as a training resource for small financial institutions, particularly those focused on microfinance, in different regions of the world and at varying stages of institutional development.
The material is not country-specific. It focuses instead on those common principles of liquidity management that are independent of the particular operating conditions and supervisory regulations that an individual financial institution might face. The presentation emphasizes the reasoning behind various alternative approaches to liquidity management. Since there is no simple recipe for optimizing liquidity in all types and sizes of financial institutions, the objective is to provide the conceptual tools that enable the reader to develop an individualized action plan for improving liquidity practices in his or her own institution.
The study guide is divided into 10 lessons. Lessons 1 - 4 form a basic course and cover the most essential elements of liquidity management including forecasting the cumulative cash position. Lessons 5 – 7 provide the material for an extended course of study, covering such topics as vault cash planning and methods of active liquidity planning. Lessons 8 – 10 cover advanced topics such as managing liquidity in multiple currencies and integrating liquidity into risk management. Each lesson is clearly set out with learning objectives, a pre-test, questions and exercises and a final multiple choice test.
Attached to the study guide is an Excel workbook (click on Multimedia) which provides a practical tool for implementing the liquidity methodology introduced in the text. To make use of this software it is important to read the introductory notes that are provided. Throughout the lessons, items and explanations relevant to different sections of the spreadsheets have been highlighted with an icon: a computer mouse for input sheets and a computer screen for output sheets.
