Toward a Framework for Systemic Liquidity Policy

J. Hobbs, Claudia Dziobek and Dewitt Marston

No 2000/034, IMF Working Papers from International Monetary Fund

Abstract: 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.

Keywords: WP; commercial bank; foreign currency; type of restructuring plan; balance sheet; bank assets; bank creditor; banking sector; lender of last resort; liquidity infrastructure; Financial architecture; liquidity management; creditor rights; microstructure; bank management capability; bank vulnerability; dispersion ratio; bank liability; excess reserves; bank experiences problem; Liquidity; Infrastructure; Currencies; Commercial banks (search for similar items in EconPapers)
Pages: 40
Date: 2000-03-01
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