In many spheres of human endeavor, from science to business to education to economic policy, good decisions depend on good measurement.
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The role of liquidity in systemic events provides yet another reason why, in the future, a more system wide or macroprudential approach to regulation is needed.
Interpretation
What this quote means
Liquidity is vital during financial crises, highlighting the need for better regulatory approaches.
Ben Bernanke emphasizes the importance of liquidity in the context of systemic financial events, arguing that when crises occur, the availability of liquid assets can greatly influence stability. He suggests that to manage such events in the future effectively, a comprehensive regulatory framework that addresses the entire financial system, rather than just individual institutions or sectors, must be adopted.
Themes
LiquidityRegulationSystemic RiskFinancial StabilityMacroprudential
In practice
Example use cases
During a financial seminar to discuss new regulatory frameworks.
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