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A
new report from the BIS, known as the central bank for the
world's central banks, identified eight areas it believed needed
attention to help reduce market turmoil, with six of them
focusing on closer co-operation and communication.
The first was that central banks needed to decide which of them
was responsible for banks with operations in multiple countries.
Others ranged from information sharing, collateral and currency
issues, to how early to disclose the provision of support to a
lender.
"The key message throughout the report is that we need to
prepare in calm times to be able to provide liquidity assistance
effectively in times of stress," said the U.S. Federal Reserve's
William Dudley, who chaired the BIS working group on the topic.
One of the complications of providing banks with billions of
dollars or euros worth of funding, as the Fed, European Central
Bank, Bank of Japan and others all did during the financial
crisis, is that the money can then flow almost anywhere.
"The general lesson that emerges from the review of recent
central bank experiences is the need to be prepared for new
situations where liquidity assistance might be required," the
BIS report said.
"In particular, central banks need to consider how the
interaction of national liquidity assistance frameworks might
affect the cross-border coordination and provision of liquidity
assistance."
For full report click https://www.bis.org/publ/cgfs58.htm
(Reporting by Marc Jones; Editing by Catherine Evans)
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