We discuss the notion of liquidity and liquidity risk within the financial system. We distinguish between three … the root of liquidity risk lies in information asymmetries and the existence of incomplete markets. The role of central … different liquidity types, central bank liquidity, funding and market liquidity and their relevant risks. In order to understand …

financial crisis, in which liquidity shocks become more erratic and the total costs of defaults increase, central banks may want … riskiness of counter parties and issuers is endogenous to the central bank's credit policies and related risk control framework …

The paper reports the outcome of the stress-testing of liquidity risk in the TARGET2 payment system, with the study … resilience of the system, defined as the network of its participants, and the appropriateness of liquidity levels under tightened … liquidity conditions. The scenarios analysed are based on extreme shocks to the value of collateral of different levels and …

We study how the subjective beliefs about loan repayment on the side of liquidity-constrained banks affect the central … bank's incentives to set looser collateral standards increase. This reduces the risk of deficient bank lending if …