Answer: Securitizing assets.

## Explanation **Securitizing assets (Option A)** is a contingent action that banks can take during stress situations. This involves converting illiquid assets into marketable securities to generate immediate liquidity when needed. **Why the other options are incorrect:** - **Option B (Decreasing lending rates)**: During stress situations, banks typically tighten lending standards and may increase rates to manage risk, not decrease them. - **Option C (Increasing capital distributions)**: During stress, banks would conserve capital by reducing or suspending distributions (dividends, share buybacks), not increasing them. - **Option D (Shifting from longer-term to shorter-term funding sources)**: This would actually increase liquidity risk as shorter-term funding is more volatile and subject to rollover risk during stress periods. Banks would typically seek more stable, longer-term funding during stress. Contingent actions are pre-planned strategies that can be activated during stress to improve liquidity positions, and asset securitization is a classic example of such a contingency funding plan component.

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