Central Bank Emergency Support to Securities Markets

51 Pages Posted: 9 Aug 2017

See all articles by Darryl King

Darryl King

International Monetary Fund (IMF)

Luis Brandao-Marques

International Monetary Fund - Monetary and Capital Markets Department

Kelly Eckhold

International Monetary Fund (IMF)

Peter Lindner

International Monetary Fund (IMF)

Diarmuid Murphy

International Monetary Fund (IMF)

Date Written: July 2017

Abstract

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.

Keywords: Liquidity, Central banks and their policies, Lender-of-last resort, market maker of last resort, fire sales, and financial stability, financial stability, Government Policy and Regulation

JEL Classification: E58, G21, G23, G28

Suggested Citation

King, Darryl and Brandao-Marques, Luis and Eckhold, Kelly and Lindner, Peter and Murphy, Diarmuid, Central Bank Emergency Support to Securities Markets (July 2017). IMF Working Paper No. 17/152. Available at SSRN: https://ssrn.com/abstract=3014082

Darryl King (Contact Author)

International Monetary Fund (IMF) ( email )

700 19th Street, N.W.
Washington, DC 20431
United States

Luis Brandao-Marques

International Monetary Fund - Monetary and Capital Markets Department ( email )

700 19th Street, N.W.
Washington, DC 20431
United States
2026238308 (Phone)
2025898308 (Fax)

Kelly Eckhold

International Monetary Fund (IMF) ( email )

700 19th Street, N.W.
Washington, DC 20431
United States

Peter Lindner

International Monetary Fund (IMF) ( email )

700 19th Street, N.W.
Washington, DC 20431
United States

Diarmuid Murphy

International Monetary Fund (IMF) ( email )

700 19th Street, N.W.
Washington, DC 20431
United States

Here is the Coronavirus
related research on SSRN

Paper statistics

Downloads
16
Abstract Views
150
PlumX Metrics