Asset-Liability Management Committee (ALCO) is a risk-management committee in a financial institution that generally comprises the senior-management levels of the institution. ALCO are to look after the financial market activities, manage liquidity and interest rate risk, understand the market position and competition etc.
34. Do you think each commercial bank should form ALCO?
Asset-Liability Management Committee
(ALCO) is the core unit of a financial institution. So it is the basic need to form an ALCO to balancing the Asset-Liability Management.
The ALCO will set a standard limits on borrowing in the short-term markets and
lending long-term instruments
that controls over the financial risks and external
events that may affect the bank's asset-liabilities position. It manages the risks to
acceptable level by monitoring and sets the competitive prices between assets and liabilities to maintain the liquidity position of the company. Without
an ALCO, a
commercial bank may lose all positive financial opportunities and the bank must be
faced by different types risk as like as financial crisis. So that it shout to be formed a ALCO for each commercial bank to manage the vulnerable financial position.