Today, the Board of Governors of the Federal Reserve System, the Federal Deposit Insurance Corporation, the National Credit Union Administration, the Office of the Comptroller of the Current and the Office of Thrift Supervision, together with the Conference of State Bank Supervisors, released a final interagency policy statement on funding and liquidity risk management. The policy statement reiterates the importance, particularly in light of the recent turmoil in the financial markets, of effective liquidity risk management to the safety and soundness of financial institutions. The policy statement also attempts to harmonize principles of sound liquidity risk management previously articulated by the banking agencies with the statement issued by the Basel Committee on Banking Supervision in September 2008. The policy statement notes that effective liquidity risk management at any one financial institution depends on the creation and implementation of processes and systems that are commensurate with that institution’s complexity, risk profile, and scope of operations and should include a focus on cash flow projections, diversified funding sources, stress testing, a cushion of liquid assets, and a formal, well-developed, contingency funding plan as primary tools for measuring and managing liquidity risk.