1. Asset liability imbalance that occurs when the maturity of a bank's assets differs from its balance sheet liabilities. Also called a mismatched maturity. Refers to the situation where a bank's deposit liabilities have a shorter term than the assets (bank loans) funded by those liabilities. An asset liability gap can be positive or negative, depending on whether the asset maturity is shorter or longer than the liability maturity.
In the Euromarket, the term is synonymous with open book or short book, and also applies to unmatched currency exposure, for example, owning more pound sterling liabilities than pound sterling assets. See also Mismatch.
2. Foreign exchange Forward Market or Spot Market purchase that has not been executed, or vice versa.
3. In Foreign Exchange trading, a currency mismatch, for example, holding more liabilities than assets in British pound sterling.
