Interest Sensitive Liabilities

Interest sensitive liabilities are short-term deposits that banks hold, which have variable interest rates (ergo the sensitivity). Money market certificates (like CDs, U.S. Treasury bills, eurodollar deposits, etc.) and savings accounts are both interest sensitive liabilities, so they’re pretty common.

The other type of liability ("liability" from the bank’s point of view) includes liabilities that are insensitive to interest rates, i.e. fixed interest rate loans.

Since Regulation Q from the Monetary Act of 1980, the volatility of demand deposits was on the fritz (the act removed the "interest rate ceiling'). With more ups and downs than usual as the new norm, banks learned how to manage interest sensitive liabilities more sensitively (well, they kinda learned).