Bank Liquidity Crucial in Mitigating Financial Crises and Promoting Stability
The article discusses the importance of bank liquidity during financial crises and regulatory changes. It shows that banks with more power create more liquidity, but government guarantees can reduce this. Following Basel III rules increases financial stability. Having high liquidity helps banks during economic shocks, like the oil price drop in 2014. This means that having more cash on hand can protect banks and keep the financial system stable.