Charles Goodhart, Enrico Perotti, 29 February 2012

Banking runs are a major threat to modern finance. This column makes the case for preventive tools over ex post intervention. It argues for assigning responsibility and novel tools to microprudential regulators for supervising individual liquidity and capital ratios, and to central banks those tools for aggregate liquidity-risk management, with overall control switching to fiscal authorities once intervention appears to require fiscal means.


CEPR Policy Research