ABSTRACT

In the 1960s, bankers referred only to 'liabilities management'; nowadays, it has become 'assets and liabilities management', which stresses the fact that the two sides of the balance sheet are intimately interrelated, though sometimes in response to an existing and specific loan demand a bank may go into the money markets to look for funding, whereas on other occasions a bank may go actively-even aggressively

– into the money markets seeking out funds at appropriate prices and then try to absorb them by making a range of new loans and/or investments. Sometimes, transactions have been deliberately matched both as to term, amount and currency; on other occasions (and, in more recent years, probably increasingly), there has been deliberate mismatching with a transformation of shorter-dated moneys into loans for longer periods, though with regular adjustments to interest rates in order to keep them in line with the current costs of money.