Liquidity Risk Charges as a Macroprudential Tool

CEPR Policy Insight No 40

Enrique G Mendoza, Enrico C Perotti, Carlos A Vegh

Liquidity risk charges were proposed in February 2009 as a new macro-prudential tool to discourage systemic risk creation by banks. A new CEPR Policy Insight refines this proposal in order to clarify challenging issues surrounding the implementation of liquidity risk charges.