Central banks divided on liquidity stress tests

Central banks with lower reserves more likely to forgo the measure

Just over half of central banks participating in the Reserve Benchmarks 2021 say they conduct liquidity stress tests. 

The lack of a wider consensus to adopt these precautionary measure is somewhat surprising taking into account the major liquidity shock triggered by Covid-19 in 2020. The US treasury glut highlighted how even assets considered of the highest quality and safety are vulnerable to liquidity crises. In the now infamous “dash for cash”, there were not enough buyers for offloading

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