This paper studies the choice between building liquidity buffers and raising funding ex post, to deal with liquidity … shocks. We uncover the possibility of an inefficient liquidity squeeze equilibrium. Agents typically choose to build smaller … liquidity buffers when they expect cheap funding. However, when agents hold smaller liquidity buffers, they can raise less …

. We find that the liquidity and breadth of euro financial markets are fast approaching those of dollar markets, and as a … by the edge that dollar financial markets still have over euro markets in terms of size, credit quality and liquidity, as …