Cover IMF Working Papers
A Simple Macroprudential Liquidity Buffer
Author: Mr. Daniel C Hardyhttps://orcid.org/0000-0002-2893-3801 and Philipp Hochreiter
Series:
IMF Working Papers
Volume/Issue:
Volume 2014: Issue 235
Language:
English
Publication Date:
22 Dec 2014
DOI:
https://doi.org/10.5089/9781498305778.001
ISBN:
9781498305778
ISSN:
1018-5941
Pages:
24
Keywords:
WP; bank; LMC; MPLB requirement; Macroprudential instruments; liquidity; bank funding; systemic risk; liquidity shock; liquidity characteristic; liquidity spiral; liquidity ring fencing; liquidity condition; liquidity outflow; liquidity property; liquidity strain; through-the-cycle MPLB level; MPLB balance; liquidity mis-match; Liquidity requirements; Liquidity risk; Reserve requirements; Global
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IMF Working Papers describe research in progress by the author(s) and are published to elicit comments and to encourage debate. The views expressed in IMF Working Papers are those of the author(s) and do not necessarily represent the views of the IMF, its Executive Board, or IMF management.
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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.
Cover IMF Working Papers
IMF Working Papers
ISSN:
1018-5941
Publisher:
International Monetary Fund