Why Do We Need Both Liquidity Regulations And A Lender Of Last Resort? A Pe...

Description: Please refer to the section BELOW (and NOT ABOVE) this line for the product details - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - Title:Why Do We Need Both Liquidity Regulations And A Lender Of Last Resort? A Perspective From Federal Reserve Lending During The 2007-09 U S Financial CrISBN13:9781511467216ISBN10:1511467215Author:Federal Reserve Board (Author)Description:(This is a RePrint) - During The 2007-09 Financial Crisis, There Were Severe Reductions In The Liquidity Of Financial Markets, Runs On The Shadow Banking System, And Destabilizing Defaults And Near-Defaults Of Major Financial Institutions In Response, The Federal Reserve, In Its Role As Lender Of Last Resort (Lolr), Injected Extraordinary Amounts Of Liquidity In The Aftermath, Lawmakers And Regulators Have Taken Steps To Reduce The Likelihood That Such Lending Would Be Required In The Future, Including The Introduction Of Liquidity Regulations These Changes Were Motivated In Part By The Argument That Central Bank Lending Entails Extremely High Costs And Should Be Made Unnecessary By Liquidity Regulations By Contrast, Some Have Argued That The Loss Of Liquidity Was The Result Of Market Failures, And That Central Banks Can Solve Such Failures By Lending, Making Liquidity Regulations Unnecessary In This Paper, We Argue That Lolr Lending And Liquidity Regulations Are Complementary Tools Liquidity Shortfalls Can Arise For Two Very Different Reasons: First, Sound Institutions Can Face Runs Or A Deterioration In The Liquidity Of Markets They Depend On For Funding Second, Solvency Concerns Can Cause Creditors To Pull Away From Troubled Institutions Using Examples From The Recent Crisis, We Argue That Central Bank Lending Is The Best Response In The Former Situation, While Orderly Resolution (By The Institution As It Gets Through The Problem On Its Own Or Via A Controlled Failure) Is The Best Response In The Second Situation We Also Contend That Liquidity Regulations Are A Necessary Tool In Both Situations: They Help Ensure That The Authorities Will Have Time To Assess The Nature Of The Shortfall And Arrange The Appropriate Response, And They Provide An Incentive For Banks To Internalize The Externalities Associated With Any Liquidity Risks Binding:Paperback, PaperbackPublisher:Createspace Independent Publishing PlatformPublication Date:2015-03-27Weight:0.25 lbsDimensions:0.08'' H x 11.02'' L x 8.5'' WNumber of Pages:38Language:English

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Book Title: Why Do We Need Both Liquidity Regulations and a Lender of Last Resort? a Perspective from Federal Reserve Lending During the 2007-09 U. S. Financial Crisis

Number of Pages: 38 Pages

Language: English

Publisher: CreateSpace

Item Height: 0.1 in

Topic: General

Publication Year: 2015

Genre: Business & Economics

Item Weight: 5.3 Oz

Item Length: 11 in

Author: Federal Reserve Federal Reserve Board

Item Width: 8.5 in

Format: Trade Paperback