The Interbank Contingent Liquidity Funding Exchange (ICLFE) has introduced what it describes as a unique market-based cooperative platform, the Interbank Liquidity Exchange (ILE), which is based on reciprocal standby letters of credit (L/Cs).

The platform can be used within strategies and processes in the banking and financial services industry to ensure institutions have sufficient funds available to meet their obligations and operate smoothly under various market conditions.

The platform allows depository institutions to comply with increasingly stringent regulatory liquidity management mandates and is intended as strong support for existing sources of reliable contingent funding.

Reciprocal arrangements

ICLFE's platform enables depository institutions to issue reciprocal irrevocable standby L/Cs to one another.

Designed to kick in only during a certified 'liquidity event,' ICLFE says irrevocable standby L/Cs provide a dependable, decentralised funding source without the unpredictability of conventional credit lines, which can be altered or cancelled during financial crises.

Strategic advantages

The developers of the platform claim its strategic advantages for financial institutions include fixed terms. Unlike other credit lines, the terms of ICLFE's program are not subject to change, guaranteeing a stable contingency funding source.

The platform ensures that institutions meet regulatory requirements with no collateral requirements and a single low annual fee covering participation, with no hidden costs or additional requirements.


ICLFE is a member-based network of federally insured US depository institutions that offer deposit accounts to the public and are insured by a federal government agency to protect depositors in case of financial instability or failure.

The patent-pending ILE provides irrevocable standby L/Cs to fund deposits while offering contingency funding of US$10 million, US$25 million or up to US$100 million depending on an institution's particular needs and size.

More information on ICLFE and ILE, together with relevant links can be found here.

This article represents the views of the author and not necessarily those of the ICC or Coastline Solutions.