RBA paper looks at responses to liquidity crises

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Central banks should contain liquidity crises by lending to commercial banks and stemming their securities selling, says a working paper published by the Reserve Bank of Australia.

In Emergency liquidity injections, Nicholas Garvin studies the effectiveness of different forms of emergency liquidity injections, such as secured lending, unsecured lending and securities purchases.

If policy-makers inject liquidity by lending to banks, there is an indirect benefit of requiring them to provide

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