scholarly journals Central Bank Liquidity Provision, Risk-Taking and Economic Efficiency

2013 ◽  
Author(s):  
Ulrich Bindseil ◽  
Juliusz Jablecki
Keyword(s):  
Central Bank ◽  
Economic Efficiency ◽  
Risk Taking ◽  
Liquidity Provision

A note on liquidity policies and financial networks

2019 ◽  
Vol 11 (3) ◽  
pp. 451-456
Author(s):  
Danilo Lopomo Beteto Wegner
Keyword(s):  
Central Bank ◽  
Design Methodology ◽  
Banking System ◽  
Market Liquidity ◽  
Financial Networks ◽  
Bank Failures ◽  
Quantitative Easing ◽  
Content Type ◽  
Net Worth ◽  
Liquidity Provision

Purpose This paper aims to provides an example of how government and central bank policies that promote market liquidity (e.g., quantitative easing programs) can change the structure of the banking system. Design/methodology/approach The nexus between liquidity policies and financial networks is addressed through an example that captures stylized features of the interbank market. In the example discussed, two scenarios are considered: one with and another without central bank/government liquidity provision, leading to two different network structures that are then used to study the likelihood of contagion. Findings The example provided shows that government and central bank policies that promote market liquidity can lead to financial networks that are better capitalized (net worth of the banking system is higher) but, at the same time, more fragile (higher likelihood of bank failures). Originality/value To the best of the author’s knowledge, this is the first attempt to model the formation of a financial network with an explicit mechanism accounting for government and central bank policies that affect market liquidity, which, in turn, could be interpreted as a quantitative easing program.

Intraday Liquidity Flows within the Financial Market Infrastructures in Mexico

2016 ◽  
pp. 191-207
Author(s):  
Biliana Alexandrova-Kabadjova ◽  
Liliana Garcia-Ochoa ◽  
Ronald Heijmans ◽  
Antoaneta Serguieva
Keyword(s):  
Central Bank ◽  
Financial Market ◽  
Payment System ◽  
Payment Systems ◽  
Transaction Data ◽  
Liquidity Provision ◽  
Flow Of Funds ◽  
External Funds ◽  
Intraday Liquidity ◽  
The Impact

In this chapter, the authors present a methodology to study the flow of funds in large-value payment systems (LVPSs). The algorithm presented differentiates the flow of payments into two categories: 1) external funds, i.e. funds transferred from other financial market infrastructures (FMIs) or provided by the central bank, and 2) the reuse of incoming payments within the same FMI. Using individual transaction data, the algorithm evaluates to what extent incoming payments are used to cover obligations. The method also studies the flow of intraday liquidity under the framework of its provision within Mexican FMIs. The aim is to evaluate the impact of intraday liquidity provision, and understand how liquidity is transmitted to participants in the Mexican Large Value Payment System, or SPEI®.

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