IMF Working Papers

Central Bank Emergency Support to Securities Markets

By Darryl King, Luis Brandão-Marques, Kelly Eckhold, Peter Lindner, Diarmuid Murphy

July 10, 2017

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Darryl King, Luis Brandão-Marques, Kelly Eckhold, Peter Lindner, and Diarmuid Murphy. Central Bank Emergency Support to Securities Markets, (USA: International Monetary Fund, 2017) accessed November 7, 2024

Disclaimer: IMF Working Papers describe research in progress by the author(s) and are published to elicit comments and to encourage debate. The views expressed in IMF Working Papers are those of the author(s) and do not necessarily represent the views of the IMF, its Executive Board, or IMF management.

Summary

This paper considers the central bank mandate with respect to financial stability and identifies the links to the functioning of securities markets. It argues that while emergency support to securities markets is an important part of the crisis management response, a high bar should be set for its use. Importantly, it should be used only as part of a comprehensive policy package. The paper considers what types of securities markets may be important for financial stability, what market conditions could trigger emergency support measures, and how programs can be designed to restore market functioning while minimizing moral hazard.

Subject: Asset and liability management, Asset liquidity, Banking, Financial institutions, Financial markets, Financial sector policy and analysis, Financial sector stability, Liquidity, Securities, Securities markets

Keywords: ABCP market, ABS market, Asset liquidity, Central bank, Commercial paper money market mutual fund liquidity facility, Financial market, Financial sector stability, Financial stability, Financing market, Fire sales, Global, Lender-of-last resort, Liquidity, Market condition, Market functioning, Market liquidity, Market maker of last resort, Market making, Monetary policy, Money market mutual fund liquidity facility, Mutual fund, Price discovery, Securities, Securities dealer, Securities markets, Treasury bill market, WP

Publication Details

  • Pages:

    50

  • Volume:

    ---

  • DOI:

    ---

  • Issue:

    ---

  • Series:

    Working Paper No. 2017/152

  • Stock No:

    WPIEA2017152

  • ISBN:

    9781484305850

  • ISSN:

    1018-5941

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