IMF Working Papers

Toward a Framework for Systemic Liquidity Policy

ByJ. Kimball Hobbs, Claudia H Dziobek, Dewitt D Marston

March 1, 2000

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J. Kimball Hobbs, Claudia H Dziobek, and Dewitt D Marston. "Toward a Framework for Systemic Liquidity Policy", IMF Working Papers 2000, 034 (2000), accessed 12/7/2025, https://doi.org/10.5089/9781451845259.001

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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

International policy efforts to strengthen financial systems have highlighted the role of liquidity. This paper explores a framework to assess arrangements for market liquidity and lays out elements of systemic liquidity policy. Robust arrangements for liquidity provide confidence to market participants that liquidity can be mobilized on demand in a predictable and transparent manner. These are crucial to resilience and effective monetary operations. Arrangements include several prudential and institutional elements and national authorities have an important role in promoting their adoption. A survey of 14 countries and two in-depth studies of Mexico and Argentina are included for illustration.

Subject: Asset and liability management, Banking, Commercial banks, Currencies, Deposit insurance, Financial institutions, Infrastructure, Liquidity, Liquidity management, Money, National accounts

Keywords: balance sheet, bank assets, bank creditor, bank experiences problem, bank liability, bank management capability, bank vulnerability, banking sector, commercial bank, Commercial banks, creditor rights, Currencies, dispersion ratio, excess reserves, Financial architecture, foreign currency, Infrastructure, lender of last resort, Liquidity, liquidity infrastructure, liquidity management, microstructure, type of restructuring plan, WP

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