Intraday liquidity
Intraday liquidity means funds a firm can access during the business day to make payments as they fall due. It matters most where payments settle in real time, one by one.
How it works
The CPMI defines intraday liquidity as funds accessible during the business day, typically to make real-time payments. Real-time gross settlement systems settle each payment individually. Each outgoing payment therefore needs funds at that moment, not at the end of the day.
The Basel Committee and the CPMI built seven monitoring tools for intraday liquidity risk. They help supervisors judge whether banks meet payment obligations on time. Payment firms face a smaller version of the same problem. Customer inflows, partner top-ups and payouts rarely line up during the day.
The CPMI notes that limited overlap in operating hours can delay the domestic leg of a cross-border payment. Funds can be stuck between systems for hours. Pitfalls include planning only on closing balances and ignoring the largest intraday gap.
Example
Illustrative example: A firm starts the day with £2,000,000. By 11:00 it has paid out £3,500,000 and received £1,000,000 from card settlement. That leaves a shortfall of £500,000 at the low point. It needs at least £500,000 of extra intraday funding, even if it closes the day positive.
Frequently asked questions
Why do we run short during the day when closing balances look fine?
Outflows often leave before inflows arrive. A balance that closes positive can still dip below zero by mid-morning. Measure the largest intraday gap, not just the closing figure.
How do real-time payout rails change our intraday needs?
Real-time rails settle each payment as it is made. That removes batch delays but means funds must be in place at every moment. Firms moving to instant payouts often need larger or better-timed balances.
Related terms
Sources
- CPMI glossary · Committee on Payments and Market Infrastructures, Bank for International Settlements
- Monitoring tools for intraday liquidity management · Basel Committee on Banking Supervision, Bank for International Settlements
- Steady as we go: results of the 2023 CPMI cross-border payments monitoring survey (CPMI Brief No 5) · Bank for International Settlements
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