Kay, John, (2015), “Liquidity Helps Financial Market Participants, Not Businesses And Households”, Social Europe, 1 December.
Nothing illustrates more starkly the difference between the preoccupations of financial market participants and the needs of businesses and households than the subject of liquidity.Last week the Bank of England held an open forum to discuss what the financial sector contributes to the real economy, and I took part in a discussion on the role of liquidity. It began from a practitioner’s definition of liquidity: “The ease with which one asset can be exchanged for another.” Finance professionals bemoaned a decline in liquidity, blaming the global crisis and the subsequent intensification of regulation. In markets such as corporate bonds, they reported almost no liquidity at all.
Relevant Posts
- R. Götz, Martin, Haselmann, Rainer, Krahnen, Jan Pieter, Steffen, Sascha, (2015), “Emergency liquidity assistance and Greek banks’ bankruptcy”, Voxeu publications, 25 September.
- Terzi, A. (2014) “Europe Must Escape A Savings Trap, Not A Liquidity Trap“, Social Europe Journal, 23 July.