) assets are bank-specific. We show that when the outside options of needy banks are weak, surplus banks may strategically … under-provide lending, thereby inducing inefficient sales of bank-specific assets. A central bank can ameliorate this …

the preservation of the central bank’s legitimacy requires that a clear line be drawn between the central bank’s provision … central bank that expose it to material credit risk should be guaranteed by the Treasury. In addition, central banks must …

banks to park liquidity at the central bank rather than lend in the market. We show that following this structural break …, settlement bank liquidity had a precautionary nature in that it rose on calendar days with a large amount of payment activity and … for banks with greater credit risk. We establish that the liquidity demand by settlement banks caused overnight inter-bank …

bank lending to examine what an optimal combination of monetary policy and regulatory capital requirements might look like … that equilibrium level of central bank policy rates should be lower than they had been prior to the crisis. …

be achieved in a decentralized banking system. What is required is that the central bank accommodates the demands of the … the sharing of idiosyncratic liquidity risk. In contrast, idiosyncratic (bank-specific) return risks cannot be shared …

instance, backward- and forward-looking models; time-varying central-bank judgment about the state of model uncertainty; and so …