CMO policy design is an underappreciated driver of capital efficiency, liquidity positioning, and model risk governance. A well-designed policy reduces validation burden, eliminates OCI capital volatility, and strengthens contingent liquidity — without constraining the investment strategy.

The three-rule framework below distills those principles into a practical, supervisory-ready policy structure.

Three-Rule Framework

CMO Investment Policy Framework

A structured policy framework for CMO investment decisions — addressing capital efficiency, liquidity positioning, and model risk governance within a supervisory-ready structure.

Research post
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