A Simple Macroprudential Liquidity Buffer
Electronic Access:
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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. 2014/235
Subject:
Asset and liability management Banking Financial crises Financial regulation and supervision Liquidity Liquidity requirements Liquidity risk Monetary policy Reserve requirements
English
Publication Date:
December 22, 2014
ISBN/ISSN:
9781498305778/1018-5941
Stock No:
WPIEA2014235
Pages:
24
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