The Reserve Bank of Australia reported two very large deficits in the system cash position last week: $4.5 billion on January 21 and $3.1 billion the following day. Such large numbers had not been reported since August, during the peak of the global liquidity crisis.Unlike last August, these large figures did not attract much attention. They were related to the coming together of a couple of tax deadlines and had nothing to do with the broader liquidity issues in the banking system.If anything, the liquidity position for banks is improving. Exchange settlement account balances hit a peak of $6.8 billion at the end of December and since then have been falling steadily to a range between $1.4 and $1.6 billion.On a day-to-day basis, the cash rate is affected by the demand for and supply of exchange settlement funds. ES funds are held by the banks on deposit with the RBA to meet their settlement obligations to each other and to the RBA.According to the Reserve Bank the average balance in exchange settlement accounts over the past few years has been $750 million.Since announcing in September that it would broaden the range of securities that could be traded with the central bank for liquidity, most of the activity has been in longer dates securities and in dealing with a wider rage of deposit-taking institutions. There has been relatively little activity in asset-backed commercial paper and residential mortgage backed securities, reflecting the fact that these are not as liquid as other instruments and the cost of trading in them is higher.