Rules must cover link between liquidity and default: Goodhart, Tsomocos

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Rule-makers must recognise that liquidity and default are intertwined if their regulatory proposals are to overcome current shortcomings, two leading economists have said.

In an article for VoxEU.org, an economics blog, published on Thursday, Charles Goodhart, a former member of the Bank of England's Monetary Policy Committee, and Dimitri Tsomocos, an economist at Oxford University who has worked for the Bank of Greece and the Bank of England, described a vicious circle in which fears of default

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