As the interbank credit market was under serious stress at the end of 2007, the Federal Reserve launched the Term Auction Facility (TAF) with the aim of injecting liquidity into the interbank market. Cecchetti (2007) explains that banks were reluctant to lend to other banks, mainly because of uncertainty about the asset quality on the balance sheets of the potential borrowers.
The Term Auction Facility effect on liquidity risk exposure
Stefano Puddu, Andreas Wälchli, 12 December 2012
Systemic liquidity risk: A European approach
Enrico Perotti, 25 October 2011
The repeated bursts of financial distress in Europe in 2010-11 reflect vulnerabilities built up in the previous decade and are germane to the roots of the credit crisis.
A consensus view on liquidity risk
Viral Acharya, Arvind Krishnamurthy, Enrico Perotti, 14 September 2011
On 15 April 2011 a joint IMF-Financial Stability Board workshop gathered senior policymakers and academics in Washington to review the open issue of systemic liquidity risk. Some participating academics agreed to underwrite this common statement, in the belief that this regulatory gap, though intellectually well-recognised, still requires concrete attention.
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