A Simple Macroprudential Liquidity Buffer

December 22, 2014

Preview Citation

Format: Chicago

Daniel C Hardy, and Philipp Hochreiter. A Simple Macroprudential Liquidity Buffer, (USA: International Monetary Fund, 2014) accessed November 21, 2024

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.

Subject: Asset and liability management, Banking, Financial crises, Financial regulation and supervision, Liquidity, Liquidity requirements, Liquidity risk, Monetary policy, Reserve requirements

Keywords: Bank, Bank funding, Global, Liquidity, Liquidity characteristic, Liquidity condition, Liquidity mis-match, Liquidity outflow, Liquidity property, Liquidity requirements, Liquidity ring fencing, Liquidity risk, Liquidity shock, Liquidity spiral, Liquidity strain, LMC, Macroprudential instruments, MPLB balance, MPLB requirement, Reserve requirements, Systemic risk, Through-the-cycle MPLB level, WP

Publication Details

Pages:

24
Volume:

---
DOI:

---
Issue:

---
Series:

Working Paper No. 2014/235
Stock No:

WPIEA2014235
ISBN:

9781498305778
ISSN:

1018-5941

FACTSHEETS

RESOURCES

TOPICS

Flagship Publications

Other Publications

IMF reports and publications by country

Regional Offices

All News

See Also

For Journalists

Press Center

RESOURCES

FLAGSHIPS

KEY SERIES

IMF NOTES

IMF Working Papers