Open AccessRethinking liquidity: A critical macro-finance view
Author(s) -
Fabian Pape
Publication year - 2020
Publication title -
finance and society
Language(s) - English
Resource type - Journals
ISSN - 2059-5999
DOI - 10.2218/finsoc.v6i1.4410
Subject(s) - market liquidity , macro , leverage (statistics) , payment , economics , dimension (graph theory) , coherence (philosophical gambling strategy) , liquidity crisis , liquidity risk , financial instrument , finance , business , computer science , physics , mathematics , quantum mechanics , machine learning , pure mathematics , programming language
This forum contribution critically rethinks the macro-financial approach to liquidity by focusing more explicitly on its public-private hybrid dimension. To do so, it introduces the notion of a ‘liquidity regime’: a heuristic device aimed at tracking the ensemble of social relations and institutions that govern the coherence of the payments system at any given time. A key insight that emerges from this approach is that the ability to make markets and access liquidity is never neutral or apolitical. What requires closer attention, therefore, is precisely how the interaction between public authorities and private market participants affords some actors greater leverage in shaping the financial system.