Hostname: page-component-586b7cd67f-vdxz6 Total loading time: 0 Render date: 2024-11-24T07:57:04.708Z Has data issue: false hasContentIssue false
  • English
  • Français

Rethinking liquidity: A critical macro-finance view

Published online by Cambridge University Press:  09 November 2023

Fabian Pape
Fabian Pape*
Affiliation:
University of Warwick, UK
*
Corresponding author: Fabian Pape, Department ofPolitics and International Studies, Social Sciences Building, University ofWarwick, Coventry, CV4 7AL, UK. Email:[email protected].
Rights & Permissions [Opens in a new window]

Extract

Core share and HTML view are not available for this content. However, as you have access to this content, a full PDF is available via the ‘Save PDF’ action button.

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.

Type
Forum: Critical macro-finance
Information
Finance and Society , Volume 6 , Issue 1 , 2020 , pp. 67 - 75
Creative Commons
Creative Common License - CCCreative Common License - BYCreative Common License - NCCreative Common License - ND
This is an Open Access article, distributed under the terms of the Creative Commons Attribution-NonCommercial-No Derivatives licence (http://creativecommons.org/licenses/by-nc-nd/4.0/), which permits noncommercial re-use, distribution, and reproduction in any medium, provided the original work is unaltered and is properly cited. The written permission of Cambridge University Press must be obtained for commercial re-use or in order to create a derivative work.
Copyright
© 2020 The Author(s)

References

Adrian, T. and Shin, H.S. (2010) Liquidity and leverage. Journal of Financial Intermediation, 19(3): 418–37.Google Scholar
Aglietta, M. (2018) Money: 5,000 Years of Debt and Power. London: Verso.Google Scholar
Avalos, F., Ehlers, T. and Eren, E. (2019) September stress in dollar repo markets: Passing or structural? BIS Quarterly Review, December.Google Scholar
Bayoumi, T.A. (2017) Unfinished Business: The Unexplored Causes of the Financial Crisis and the Lessons Yet to be Learned. New Haven, CT: Yale University Press.Google Scholar
Beggs, M. (2012) Liquidity as a social relation. Paper presented to the Eastern Economic Association conference. Boston, 28 February.Google Scholar
Beggs, M. (2016) The state as a creature of money. New Political Economy, 22(5): 463–77.Google Scholar
Blyth, M. and Matthijs, M. (2017) Black swans, lame ducks, and the mystery of IPE's missing macroeconomy. Review of International Political Economy, 24(2): 203–31.Google Scholar
Borio, C. (2009) Ten propositions about liquidity crises. BIS Working Papers, 293. Basel: Bank for International Settlements.Google Scholar
Braun, B. (2018) Central banking and the infrastructural power of finance: The case of ECB support for repo and securitization markets. Socio-Economic Review, https://doi.org/10.1093/ser/mwy008.Google Scholar
Brunnermeier, M. and Pedersen, L. (2009) Market liquidity and funding liquidity. The Review of Financial Studies, 22(6): 2201–38.Google Scholar
Christophers, B. (2015) Against (the idea of) financial markets. Geoforum, 66: 85–93.Google Scholar
Christophers, B., Leyshon, A. and Mann, G. (eds.) (2017) Money and Finance after the Crisis: Critical Thinking for Uncertain Times. Hoboken, NJ: Wiley Blackwell.Google Scholar
CGFS (1999) Market Liquidity: Research Findings and Selected Policy Implications. Basel: Bank for International Settlements.Google Scholar
CGFS (2011) Global liquidity: Concept, measurement and policy implications. CGFS Working Papers, 45. Basel: Bank for International Settlements.Google Scholar
Collier, S. (2009) Topologies of power: Foucault's analysis of political government beyond ‘governmentality’. Theory, Culture & Society, 26(6): 78–108.Google Scholar
Cooper, M. and Konings, M. (2015) Contingency and foundation: Rethinking money, debt, and finance after the crisis. South Atlantic Quarterly, 114(2): 239–50.Google Scholar
Gabor, D. (2016) The (impossible) repo trinity: The political economy of repo markets. Review of International Political Economy, 23(6): 967–1000.Google Scholar
Gabor, D. (2020) Critical macro-finance: A theoretical lens. Finance and Society, 6(1): 45–55.Google Scholar
Gabor, D. and Vestergaard, J. (2018) Chasing unicorns: The European single safe asset project. Competition and Change, 22(2): 139–64.Google Scholar
Gelpern, A. (2014) Common capital: A thought experiment in cross-border resolution. Texas International Law Journal, 49(2): 355–84.Google Scholar
Goodhart, C. (1994) What should central banks do? What should be their macroeconomic objectives and operations? The Economic Journal, 104(427): 1424–36.Google Scholar
Hardie, I. and Howarth, D. (eds.) (2013) Market-based Banking and the International Financial Crisis. Oxford: Oxford University Press.Google Scholar
Hockett, R. and Omarova, S. (2017) The finance franchise. Cornell Law Review, 102(5): 1143–218.Google Scholar
Knafo, S. (2020) Macro-finance and the financialisation of economic policy. Finance and Society, 6(1): 87–94.Google Scholar
Konings, M. (2010) The pragmatic sources of modern power. European Journal of Sociology, 51(1): 55–91.Google Scholar
Mehrling, P. (2011) The New Lombard Street: How the Fed Became the Dealer of Last Resort. Princeton, NJ: Princeton University Press.Google Scholar
Mehrling, P. (2017) Financialization and its discontents. Finance and Society, 3(1): 1–10.Google Scholar
Minsky, H. (1957) Central banking and money market changes. The Quarterly Journal of Economics, 71(2): 171–87.Google Scholar
Minsky, H. (1993) On the non-neutrality of money. Federal Reserve Bank of New York Quarterly Review, 18(1): 77–82.Google Scholar
Mitchell, T. (1991) The limits of the state: Beyond statist approaches and their critics. American Political Science Review, 85(1): 77–96.Google Scholar
Murau, S. and Pforr, T. (2020) What is money in a critical macro-finance framework? Finance and Society, 6(1): 56–66.Google Scholar
Pozsar, Z. (2016) What excess reserves? Global Money Notes, 5. Credit Suisse Economic Research.Google Scholar
Schrimpf, A., Shin, H. and Sushko, V. (2020) Leverage and margin spirals in fixed income markets during the Covid-19 crisis. BIS Bulletin, 2 (April).Google Scholar
Sgambati, S. (2016) Rethinking banking: Debt discounting and the making of modern money as liquidity. New Political Economy, 21(3): 274–90.Google Scholar
Sgambati, S. (2019) The art of leverage: A study of bank power, money-making and debt finance. Review of International Political Economy, 26(2): 287-312. Shin, H.S. (2013) The second phase of global liquidity and its impact on emerging economies. Keynote address at the Federal Reserve Bank of San Francisco Asia Economic Policy Conference. San Francisco, 3-5 November.Google Scholar
Sissoko, C. (2019) Repurchase agreements and the (de)construction of financial markets. Economy and Society, 48(3): 315–41.Google Scholar
Stigum, M. and Crescenzi, A. (2007) Stigum's Money Market. 4th edition. New York, NY: McGraw-Hill.Google Scholar
Tirole, J. (2011) Illiquidity and all its friends. Journal of Economic Literature, 49(2): 287–325.Google Scholar
Tucker, P. (2018) Unelected Power: The Quest for Legitimacy in Central Banking and the Regulatory State. Princeton, NJ: Princeton University Press.Google Scholar
Wansleben, L. (2020) Formal institution building in financialized capitalism: The case of repo markets. Theory and Society, https://doi.org/10.1007/s11186-020-09385-2.Google Scholar