Why central banks should look at liquidity risk

Worrying about a bank's liquidity is hardly new. Why then have banks' techniques for managing liquidity risk received so much attention recently? This is the question that we set out to answer, and, in doing so will look at why, in particular, it should worry central banks and what they in turn should do about it. But first, a brief definition to make sure we start from the same place. Liquidity risk is "the risk that the firm will not be able to efficiently meet both expected and unexpected cur

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