Is it the end of the game for cash flow matching?
Cash flow matching has features in common with Tetris – it’s one of the oldest techniques for matching assets to liabilities. The objective of cash flow matching is clear but finding a perfect solution is difficult and, despite more sophisticated approaches being available, it remains popular.
Cash flow matching is also simple to understand and it is challenging to implement, but what is addictive in Tetris is a hindrance in asset liability management. Is it time to trade in cash flow matching for more modern approaches that are designed for today’s technology?