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Options for meeting the demand for international liquidity during financial crises


  • Richhild Moessner
  • William A Allen


The financial crisis has heightened the awareness of the risk of a sudden shortage of foreign currencies. Governments and central banks are looking for ways to obtain "liquidity assurance", ie the assurance of having access to international liquidity if they need it. This article discusses how such assurance might be provided, whether by multilateral means, such as reserve pooling or structures such as the IMF; by bilateral means, such as swap arrangements; or unilaterally, by building up foreign exchange reserves. All of the possible solutions have advantages and disadvantages, and a diversity of approaches therefore seems likely. If international arrangements are deemed to be inadequate, unilateral actions will continue.

Suggested Citation

  • Richhild Moessner & William A Allen, 2010. "Options for meeting the demand for international liquidity during financial crises," BIS Quarterly Review, Bank for International Settlements, September.
  • Handle: RePEc:bis:bisqtr:1009g

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    References listed on IDEAS

    1. Aizenman, Joshua & Jinjarak, Yothin & Park, Donghyun, 2011. "International reserves and swap lines: Substitutes or complements?," International Review of Economics & Finance, Elsevier, vol. 20(1), pages 5-18, January.
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    Cited by:

    1. Domanski, Dietrich & Moessner, Richhild & Nelson, William R., 2014. "Central banks as lender of last resort: experiences during the 2007-2010 crisis and lessons for the future," Finance and Economics Discussion Series 2014-110, Board of Governors of the Federal Reserve System (U.S.).
    2. Joseph Joyce & Raul Razo-Garcia, 2011. "Reserves, quotas and the demand for international liquidity," The Review of International Organizations, Springer, vol. 6(3), pages 393-413, September.
    3. Dietrich Domanski & Richhild Moessner & William Nelson, 2014. "Central banks as lenders of last resort: experiences during the 2007-10 crisis and lessons for the future," BIS Papers chapters,in: Bank for International Settlements (ed.), Re-thinking the lender of last resort, volume 79, pages 43-75 Bank for International Settlements.

    More about this item

    JEL classification:

    • E58 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit - - - Central Banks and Their Policies
    • G01 - Financial Economics - - General - - - Financial Crises
    • F31 - International Economics - - International Finance - - - Foreign Exchange


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