Liquidity is central to the stability of the financial system. A “run on the bank” can kill even sound institutions if they cannot readily find the cash to cover short-term demands. Further, scrambling to find cash can force some players to sell assets at distressed prices and this, in turn, may trigger insolvencies and failures. A key role of central banks is to be a “lender of last resort” in times of crisis to prevent liquidity problems from triggering a full-fledged financial crisis. A resilient financial system needs rules to ensure financial institutions maintain adequate liquidity and that the central banks provide a backstop for crisis situations.
On April 30, the Initiative on Business and Public Policy at Brookings hosted a day-long event addressing these topics. Many high-level experts from industry, academia, and government came together to consider key issues related to liquidity and the lender of last resort, including: the function and liquidity adequacy of banks; the liquidity coverage ratio, net stable funding ratio, and short-term wholesale funding market reform; liquidity needs in the post-crisis world; and liquidity provision for bank resolution.
Liquidity and the Role of the Lender of Last Resort (Panel 1)
Liquidity and the Role of the Lender of Last Resort (Panel 2)
Liquidity and the Role of the Lender of Last Resort (Panel 3)
Liquidity and the Role of the Lender of Last Resort (Ben Bernanke Keynote Address)
Liquidity Needs in the Post-Crisis World and Liquidity Provision for Bank Resolution
1:45 pmPaul Saltzman President, The Clearing House Association; - Executive Vice President and General Counsel, The Clearing House Payments Company
Closing Keynote Address
Welcome and Opening Remarks
Lender of Last Resort: Examining the Function and Liquidity Adequacy of Banks
9:15 amDarrell Duffie Dean Witter Distinguished Professor of Finance - Stanford Graduate School of Business
Liquidity Coverage Ratio, Net Stable Funding Ratio and Short-Term Wholesale Funding Market Reform