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Register, cap and trade: a proposal for containing systemic liquidity risk

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journal contribution
posted on 10.03.2017, 10:13 by Alistair MilneAlistair Milne
A fundamental cause of the global financial crisis was excessive maturity mismatch, notably shadow banking holdings of sub-prime MBS and other structured credit instruments and crossborder Euro area interbank lending to the uncompetitive Euro area periphery. The costs of short term funding do not fully reflect underlying asset risks and this created systemic liquidity and credit risks. This externality can be controlled through the issue of tradable licenses for short term funding. This is a simpler and more efficient way of addressing systemic liquidity risk than the controls on individual institutions proposed by international regulators.

History

School

  • Business and Economics

Department

  • Business

Published in

Economics: The Open-Access, Open-Assessment E-Journal

Volume

7

Citation

MILNE, A., 2013. Register, cap and trade: a proposal for containing systemic liquidity risk. Economics: The Open-Access, Open-Assessment E-Journal, 2013-7

Publisher

Kiel Institute for World Economy and the ZBW – Leibniz Information Centre for Economics

Version

VoR (Version of Record)

Publisher statement

This work is made available according to the conditions of the Creative Commons Attribution-NonCommercial-NoDerivatives 4.0 International (CC BY-NC-ND 4.0) licence. Full details of this licence are available at: https://creativecommons.org/licenses/by-nc-nd/4.0/

Publication date

2013

Notes

This paper was published as Open Access under the Creative Commons Attribution Licence 3.0.

ISSN

1864-6042

Language

en