Liquidity and solvency have been called the "heavenly twins" of banking (Goodhart, Charles, 'Liquidity Risk Management …', Financial Stability Review - Special Issue on Liquidity, Banque de France, No. 11, February, 2008). Since these "twins" interact … grounded in information and confidence, and it is confidence which in the end determines liquidity. In other words, liquidity …

Liquidity backstops have important implications for financial stability. In this paper, we provide a microfoundation … for the important role of liquidity backstops in mitigating runs (or, conversely, the role of the lack of liquidity … financial crisis of 2007-09 provide a natural experiment to identify the value of a liquidity backstop in mitigating runs …

and of income losses following a crisis. She tests the validity of "insurance" and "liquidity" models of currency crisis …