BIS says central banks should prepare for market-making in crises
BIS committee warns of split liquidity and suggests central banks prepare crisis measures to support market-making, including the potential for direct intervention in critical markets
Central banks should strengthen measures to support market-making in the event of crises, the Bank for International Settlements' Committee on the Global Financial System (CGFS) says in a report.
Liquidity has experienced a "bifurcation" since the global financial crisis, the report says, with growing activity in more liquid instruments but declining activity in illiquid instruments. This has made liquidity more "fragile" and susceptible to crises.
Market factors and regulatory factors are
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