The Growth of Asset and Liability Management

Asset and liability management is not an easy concept to describe, still less to define. After all, is it not something inherent in banking that banks should manage their assets and liabilities and have they not always done so? Of course, the answers to these questions must lie in the affirmative, but the important point is that the ways in which banks manage assets and liabilities vary over time. Modern methods of asset and liability management have been developed to cope with a complicated banking world, and one in which banks have found themselves dealing in an ever-widening range of assets and liabilities expressed in many currencies and frequently booked in many different locations. In the face of this complication, it has become necessary to be more systematic: old ratios and rules-of-thumb are no longer adequate; banks have had to rethink asset and liability management and to devise new techniques and new measures.