He begins by briefly reviewing the origins of the present financial crisis, noting that "defences against a rise in system-wide liquidity pressure were clearly inadequate" and that "attempts by banks to use defences designed to address idiosyncratic liquidity problems.severely compounded system-wide stress". As such he notes that, "reducing the likelihood and impact of future episodes of system-wide liquidity risk is high on the policy agenda". He welcomes the initiatives being taken by the Basel Committee and Committee of European Banking Supervisors to strengthen the management and supervision of liquidity risk by individual firms, but believes future financial regulation needs to take stronger account of system-wide implications.
Press release