Konferenzbeitrag
Liquidity Regulation, the Central Bank, and the Money Market
As reliance on excessively short-term wholesale funding has been one of the major causes for the 2007-2009 financial crisis, recent advances in global liquidity regulation try to curb the excessive reliance on short-term wholesale funding without being clear on how such an approach will affect the overall equilibrium on money markets. In particular, liquidity regulation may interfere with the central bank's influence on short-term money market rates. This paper tries to fill the gap in understanding the interaction between the money market, the central bank, and the regulator. Importantly, it shows that the existence of a central bank can be welfare-improving when the market equilibrium is driven by collateral constraints and asymmetric information. Regulation can be welfare-improving in the presence of an externality and also in case of collateral constraints, but reduces activity on the unsecured market. This implies that in case of collateral constraints the regulator can lead to a complete crowding out of the unsecured market which leads to an increased central bank intermediation need.
- Language
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Englisch
- Bibliographic citation
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Series: Beiträge zur Jahrestagung des Vereins für Socialpolitik 2013: Wettbewerbspolitik und Regulierung in einer globalen Wirtschaftsordnung - Session: Liquidity and Regulation ; No. E19-V3
- Classification
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Wirtschaft
Monetary Systems; Standards; Regimes; Government and the Monetary System; Payment Systems
Crisis Management
Economics of Regulation
- Event
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Geistige Schöpfung
- (who)
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Scheubel, Beatrice
Körding, Julia
- Event
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Veröffentlichung
- (who)
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ZBW - Deutsche Zentralbibliothek für Wirtschaftswissenschaften, Leibniz-Informationszentrum Wirtschaft
- (where)
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Kiel und Hamburg
- (when)
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2013
- Handle
- Last update
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10.03.2025, 11:43 AM CET
Data provider
ZBW - Deutsche Zentralbibliothek für Wirtschaftswissenschaften - Leibniz-Informationszentrum Wirtschaft. If you have any questions about the object, please contact the data provider.
Object type
- Konferenzbeitrag
Associated
- Scheubel, Beatrice
- Körding, Julia
- ZBW - Deutsche Zentralbibliothek für Wirtschaftswissenschaften, Leibniz-Informationszentrum Wirtschaft
Time of origin
- 2013
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Risk Sensitivity of Banks, Interbank Markets and the Effects of Liquidity Regulation
Liquidity in the Liquidity Crisis: Evidence from Divisia Monetary Aggregates in Germany and the European Crisis Countries
Liquidity Crises, Banking, and the Great Recession
Understanding Benign Liquidity Traps: The Case of Japan
Money, Regulation and Growth: Financing New Growth in Europe
Bank stability and the allocation of liquidity in the banking system
Liquidity and asset prices: How strong are the linkages?
The ‘Celtic Crisis’: Guarantees, transparency, and systemic liquidity risk
Follow The Money: Piracy and Online Advertising
The Euro Area Interbank Market and the Liquidity Management of the Eurosystem in the Financial Crisis
Insights on Banks' Liquidity Management: Evidence from Regulatory Liquidity Data
Gradualism and Liquidity Traps
Risk Sensitivity of Banks, Interbank Markets and the Effects of Liquidity Regulation
Liquidity in the Liquidity Crisis: Evidence from Divisia Monetary Aggregates in Germany and the European Crisis Countries
Liquidity Crises, Banking, and the Great Recession
Understanding Benign Liquidity Traps: The Case of Japan
Money, Regulation and Growth: Financing New Growth in Europe
Bank stability and the allocation of liquidity in the banking system
Liquidity and asset prices: How strong are the linkages?
The ‘Celtic Crisis’: Guarantees, transparency, and systemic liquidity risk
Follow The Money: Piracy and Online Advertising
The Euro Area Interbank Market and the Liquidity Management of the Eurosystem in the Financial Crisis
Insights on Banks' Liquidity Management: Evidence from Regulatory Liquidity Data