EconPapers    
Economics at your fingertips  
 

Open for Business: Entrepreneurial Central Banks and the Cultivation of Market Liquidity

Marius Birk and Matthias Thiemann

New Political Economy, 2020, vol. 25, issue 2, 267-283

Abstract: In 2013, the Governor of the Bank of England heralded that the Bank of England is ‘open for business’: ready to buy and sell every asset it can value, thereby adjusting the role of the Bank of England to the demands of market-based finance. This article examines this re-articulation of the role of central banks in financial markets, situating it in the context of the recently enacted Basel III regulatory reforms. By placing a regulatory price on private liquidity provision, Basel III hampers broker-dealers’ market-making capacity and the liquidity of assets used as collateral in repo-transactions. The BoE aims to counter these fragilities of market-based finance, providing a potential backstop for market prices. Endorsing entrepreneurial principles, a hallmark of neoliberal reason, this hybrid mode of external and internal intervention establishes a new balance in the relationship between central banks and private market actors. Our paper complements analyses which showed that such liquidity-providing interventions of central banks are of institutional necessity by highlighting how regulators and central bankers engage with this task. We show that the ‘cultivation of market liquidity’ is driven by the intention to transform shadow-banking into a value for society, therefore accepting to engage in an admittedly risky investment.

Date: 2020
References: Add references at CitEc
Citations: View citations in EconPapers (3)

Downloads: (external link)
http://hdl.handle.net/10.1080/13563467.2019.1594745 (text/html)
Access to full text is restricted to subscribers.

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:taf:cnpexx:v:25:y:2020:i:2:p:267-283

Ordering information: This journal article can be ordered from
http://www.tandfonline.com/pricing/journal/cnpe20

DOI: 10.1080/13563467.2019.1594745

Access Statistics for this article

New Political Economy is currently edited by Professor Colin Hay

More articles in New Political Economy from Taylor & Francis Journals
Bibliographic data for series maintained by Chris Longhurst ().

 
Page updated 2025-03-20
Handle: RePEc:taf:cnpexx:v:25:y:2020:i:2:p:267-283