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A Simple Macroprudential Liquidity Buffer

Author

Listed:
  • Mr. Daniel C Hardy
  • Philipp Hochreiter

Abstract

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.

Suggested Citation

  • Mr. Daniel C Hardy & Philipp Hochreiter, 2014. "A Simple Macroprudential Liquidity Buffer," IMF Working Papers 2014/235, International Monetary Fund.
    • Handle: RePEc:imf:imfwpa:2014/235
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    References listed on IDEAS

    as
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    Cited by:

    1. International Monetary Fund, 2016. "Morocco: Technical Note-Macroprudential Policy: Institutional Arrangements and Instruments," IMF Staff Country Reports 2016/330, International Monetary Fund.
    2. Li, Boyao & Xiong, Wanting & Chen, Liujun & Wang, Yougui, 2017. "The impact of the liquidity coverage ratio on money creation: A stock-flow based dynamic approach," Economic Modelling, Elsevier, vol. 67(C), pages 193-202.
    3. Buschmann, Christian & Schmaltz, Christian, 2017. "Sovereign collateral as a Trojan Horse: Why do we need an LCR+," Journal of Financial Stability, Elsevier, vol. 33(C), pages 311-330.
    4. Bonner, Clemens & Wedow, Michael & Budnik, Katarzyna & Koban, Anne & Kok, Christoffer & Laliotis, Dimitrios & Meller, Barbara & Melo, Ana Sofia & Moldovan, Iulia & Schmitz, Stefan & Couaillier, Cyril , 2018. "Systemic liquidity concept, measurement and macroprudential instruments," Occasional Paper Series 214, European Central Bank.

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