by Enrico Perotti tells Tim Phillips that while regulatory reform means that banks are unlikely to be at risk, the coronavirus shock poses a serious liquidity risk for the shadow banking sector, where significant funding has been extended on the basis of cash flow rather than real collateral. Avoiding financial panic is key, and will require liquidity support as well as targeted fiscal measures.
Topics:
Enrico Perotti considers the following as important:
This could be interesting, too:
Bordo, Levin, Levy, Sinha writes Scenario analysis, contingency planning, and central bank communications
Corsetti, Kuester, Müller, Schmidt writes When flexible exchange rates don’t insulate economies from external shocks
Kubota, Onishi, Toyama writes COVID-19 stimulus payments: Evidence from Japan
Graziano, Handley, Limão writes Brexit uncertainty and trade disintegration in Europe and beyond
Enrico Perotti tells Tim Phillips that while regulatory reform means that banks are unlikely to be at risk, the coronavirus shock poses a serious liquidity risk for the shadow banking sector, where significant funding has been extended on the basis of cash flow rather than real collateral. Avoiding financial panic is key, and will require liquidity support as well as targeted fiscal measures.