systemic liquidity risk

systemic liquidity risk
Liquidity risk arising from causes external to the entity. Systemic liquidity requirements can take a number of forms:
(1) Macro economic corrections. These may be recessions or credit crunches. They may be national or regional in scope.
(2) Capital markets disruptions. These types of liquidity crises are more common. An excellent recent example is the flight to quality that occurred in August and September of 1998 after the collapse of the Russian ruble and the rescue of a highly leveraged hedge fund.
(3) Payments systems disruptions. Banks are heavily dependent upon a few national and international data systems for transferring funds. A disruption in one of these systems can easily and quickly cascade into a major systemic problem. American Banker Glossary

Financial and business terms. 2012.

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