Liquidity impairment harms policy transmission – BIS paper
Authors say QE may be more potent in times of market stress
Liquidity impairment harms the transmission of monetary policy, research from the Bank for International Settlements argues.
The working paper, published on September 9, argues that market functioning “is not merely a financial stability concern but a central determinant of the efficacy of conventional monetary policy”.
The authors – Oliver Ashtari-Tafti, Rodrigo Guimaraes, Gabor Pinter and Jean-Charles Wijnandts – examine aggregate yield data from the US Treasuries market. They argue that bond
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