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Title: Register, cap and trade: a proposal for containing systemic liquidity risk
Authors: Milne, Alistair
Keywords: Basel III
Debt deflation
Endogenous money
Financial regulation
Global financial crisis
Limited purpose banking
Maturity mismatch
Narrow money
Pigouvian taxes
Ring fencing
Systemic financial risk
Systemic financial externalities
Tobin tax
Issue Date: 2013
Publisher: Kiel Institute for World Economy and the ZBW – Leibniz Information Centre for Economics
Citation: MILNE, A., 2013. Register, cap and trade: a proposal for containing systemic liquidity risk. Economics: The Open-Access, Open-Assessment E-Journal, 2013-7
Abstract: A fundamental cause of the global financial crisis was excessive maturity mismatch, notably shadow banking holdings of sub-prime MBS and other structured credit instruments and crossborder Euro area interbank lending to the uncompetitive Euro area periphery. The costs of short term funding do not fully reflect underlying asset risks and this created systemic liquidity and credit risks. This externality can be controlled through the issue of tradable licenses for short term funding. This is a simpler and more efficient way of addressing systemic liquidity risk than the controls on individual institutions proposed by international regulators.
Description: This paper was published as Open Access under the Creative Commons Attribution Licence 3.0.
Version: Published
DOI: 10.5018/economics-ejournal.ja.2013-7
URI: https://dspace.lboro.ac.uk/2134/24358
Publisher Link: http://dx.doi.org/10.5018/economics-ejournal.ja.2013-7
ISSN: 1864-6042
Appears in Collections:Published Articles (Business School)

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