Transfer pricing of liquidity

Here we want to highlight the question of what price for liquidity the treasury unit of
a financial institution should quote to the different entities of the bank. This question
is closely related to the role of the treasury in the bank. If it is merely a servicing
unit, which provides liquidity to the different business lines for the best price or if it
is a trading unit, which is entitled to take active positions on the yield curve. The
following example should highlight the ideas.