A Simple Macroprudential Liquidity Buffer

Author/Editor:

Daniel C Hardy ; Philipp Hochreiter

Publication Date:

December 22, 2014

Electronic Access:

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Disclaimer: This Working Paper should not be reported as representing the views of the IMF.The views expressed in this Working Paper are those of the author(s) and do not necessarily represent those of the IMF or IMF policy. Working Papers describe research in progress by the author(s) and are published to elicit comments and to further debate

Summary:

A mechanism is proposed that aims to reduce the risk of a banking sector liquidity crisis—which is a quintessentially systemic event and thus the object of macroprudential policy—and moderate the effects of a crisis should one occur. The instrument would give banks more incentive to build up buffers of systemically liquid assets as a proportion of their total liabilities, yet these buffers would be usable in times of stress. The modalities of the instrument are considered with a view to making it effective, efficient, and robust.

Series:

Working Paper No. 14/235

Subject:

English

Publication Date:

December 22, 2014

ISBN/ISSN:

9781498305778/1018-5941

Stock No:

WPIEA2014235

Price:

$18.00 (Academic Rate:$18.00)

Format:

Paper

Pages:

24

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