Spring 2025 CPE Money & Finance Seminar Series: Who Governs Finance?

Session 3: Measuring Liquidity Risk in the Global Financial System

Monday, March 24, 2025

Financial globalization and deregulation have historically been predicated upon the idea that unfettered capital markets could produce a better allocation of resources across investors and countries. The rise of market-based finance and globally-connected financial institutions, however, has also led to synchronization of risks. This scenario has led to potentially disruptive repercussions for financial instability and partial loss of monetary sovereignty needed to stabilize the world economies. In order to ensure that risks are kept in check, monetary authorities and regulators seek to act preemptively to quantitatively monitor the instability risks of the financial system. As such, the problem of liquidity management becomes also a problem of liquidity measurement. This is all the more important when considering the political economy implications of systemic risk under liquidity crunch. In this session, we will explore the theoretical, analytical, and quantitative understandings of liquidity measurement, with a potentially specific focus on wholesale funding risk and the problem of radical uncertainty.
Speakers:

David Aikman
King’s Business School, King’s College London

Stephan Luck
Federal Reserve Bank of New York