[FMC 2024] Policy Session 1: Domestic Liquidity Provision during Potential Crises

The Federal Reserve is the ultimate lender of last resort to the US financial system. Prior to the global financial crisis (GFC), the Fed provided liquidity to banks but relied on banks to channel that liquidity to nonbank sectors. During the GFC, the banking and overall financial system faced liquidity and solvency problems, forcing the Fed to take the lead role. The COVID-19 pandemic induced global dash-for-cash and the deposit run of spring 2023 saw further expansions of the Fed's liquidity provision role. In the wake these developments, regulators have sought to strengthen banks' capital and liquidity. However, this comes at the cost of shifting more liquidity risk outside the banking sector and limiting banks' ability to assist the Fed. Among the topics to be addressed by this panel are the appropriateness of the Fed's direct provision of liquidity to stressed sectors, the circumstances under which this is permitted, and the role regulation can play in reducing liquidity risk.
Moderator: Steven Kelly, Associate Director of Research, Yale Program on Financial Stability
Panelist: Luc Laeven, Director-General of Directorate General Research, European Central Bank
Panelist: Susan McLaughlin, Executive Fellow, Yale Program on Financial Stability
Panelist: Bill Nelson, Executive Vice President and Chief Economist, Bank Policy Institute
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The Financial Markets Conference, the Atlanta Fed's signature policy and research event, convenes leading experts to discuss emerging financial market issues and their monetary policy implications.
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