We build a model of financial sector illiquidity in an open economy. Illiquidity is defined as a situation in which a country's consolidated financial system has potential short-term obligations that exceed the amount of foreign currency available on short notice. We show that illiquidity is key...

The current financial turmoil has generated considerable discussion of liquidity. Moreover, it has been widely reported that the Federal Reserve played a major role in supplying liquidity to financial markets during this distressed time. This article describes two ways in which the Fed has...

The Federal Home Loan Bank (FHLB) System is a large, complex, and understudied government-sponsored liquidity facility that currently has more than $1 trillion in secured loans outstanding, mostly to commercial banks and thrifts. In this paper, we document the significant role played by the FHLB...

We study the dynamics of liquidity provision by dealers during an asset market crash, described as a temporary negative shock to investors’ aggregate asset demand. We consider a class of dynamic market settings where dealers can trade continuously with each other, while trading between dealers...

The terrorist attacks of 9/11 triggered a staggering increase in demand for U.S. dollars all over the world, a demand that threatened to disrupt the American payments system but was met swiftly and successfully by the Federal Reserve. Earlier in the nation’s history, the system didn’t...

Remarks at the Securities Industry and Financial Markets Association and Pension Real Estate Association's Public-Private Investment Program Summit, New York City.

Introductory Remarks for the Panel Discussion Sponsored by the Heller-Hurwicz Economics Institute and the Economic Club of Minnesota at the University of Minnesota, Minneapolis.

Remarks at the ACI 2010 World Congress, Sydney, Australia.