. Theory consistent with dollar appreciation in the crisis suggests that their impact should be greater for countries that have … transparency or illiquidity. However, several of the important announcements concerning the international swap programs …

liquidity until their collapse. An official report (SIC, 2010) has, however, exposed severe weaknesses in the banks’ assets and … borrowers, while they should have been deleveraging and securing their liquidity positions in foreign currency. The banks also … before the collapse of October 2008 the banks all reported strong liquidity positions. These reports were misleading, but we …

meaningful risk-return relation in the FX market. Further analysis shows that liquidity risk also matters for expected FX returns …

) temporarily reduces market liquidity. …

We provide a theory of the determination of exchange rates based on capital flows in imperfect financial markets … theory of exchange rate determination in imperfect financial markets not only rationalizes the empirical disconnect between …