about bank's liquidity requirement

L3 book2 page191 question7 mention: “for the bank,there has been an influx of deposits lately and a reduction in the demand for new loans.” The answer reply that"Liquidity: the bank requires liquidity to meet new loan liquidity" I cannot understand what’s the relation. I think: because there’s fewer demand for new loans, the bank can buy some illiquid securities.

Read more on IPS section for banks; the Liquidity requirement is for bank’s investment portfolio. Remember, bank’s investment portfolio need to compliment bank’s asset holding. If bank have illiquid asset, investment holding needs to be highly liquid; if bank asset is low risk, then bank’s investment holding can have more risk. Helps??

The idea of joining an ‘elite’ club is appealing though.