What can modifications or waivers of overall liquidity standards allow firms to do?

Modifications or waivers of overall liquidity standards are designed to allow firms a certain degree of flexibility in how they manage and assess their liquidity positions. When these modifications are applied, they enable firms to be assessed in conjunction with another company, such as in a group or consolidated context. This approach encourages collaboration and risk-sharing among firms that are closely linked, allowing them to manage liquidity more effectively across the group rather than in isolation.

This is beneficial for firms that may have different liquidity profiles but can support each other in times of financial stress. By assessing liquidity collectively, firms can potentially improve their overall resilience and adjust their strategies in a more strategic manner, increasing their capacity to respond to market changes and pressures.

Other options do not accurately represent the purpose of modifications or waivers. Evaluating liquidity solely based on a single company ignores the intra-group benefits of shared resources and risks. Ignoring liquidity standards entirely contradicts regulatory objectives aimed at ensuring financial stability. Enhancing capital base evaluation is unrelated to liquidity standards, as liquidity concerns the available cash flow and assets rather than the capital adequacy indicators usually considered in capital evaluations.