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2 posts on "interbank market"
August 12, 2024

Reallocating Liquidity to Resolve a Crisis

Kinda Hachem

Decorative photo of silver spigot on blackboard with dollar signs chalked on the board coming out of the spigot.

Shortly after the collapse of Silicon Valley Bank (SVB) in March 2023, a consortium of eleven large U.S. financial institutions deposited $30 billion into First Republic Bank to bolster its liquidity and assuage panic among uninsured depositors. In the end, however, First Republic Bank did not survive, raising the question of whether a reallocation of liquidity among financial institutions can ever reduce the need for central bank balance sheet expansion in the fight against bank runs. We explore this question in this post, based on a recent working paper.

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Posted at 7:00 am in Banks, Crisis, Liquidity | Permalink
May 6, 2013

Uncertainty, Liquidity Hoarding, and Financial Crises

One of the most interesting phenomena marking the recent financial crisis were the disruptions in the interbank market, where banks borrow and lend reserves to each other.

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Posted at 7:00 am in Financial Institutions, Lender of Last Resort | Permalink

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Liberty Street Economics features insight and analysis from New York Fed economists working at the intersection of research and policy. Launched in 2011, the blog takes its name from the Bank’s headquarters at 33 Liberty Street in Manhattan’s Financial District.

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