Liquidity risk in periods of intensive information flow

Liquidity is a prerequisite for the sound functioning of markets and of the whole financial system. However, once unexpected and unsettling information is released, liquidity may be insufficient to meet the demand of institutional and private investors. In the worst case, problems affecting one market may spread and result in a systemic crisis or a bank run. Consequently, it is particularly important to implement risk management solutions at the institutional level that help to avoid the risk of such liquidity breakdowns. This book analyzes issues regarding the formation of liquidity shortages from two points of view. Firstly, it focuses on the process of liquidity provision in financial markets observed during scheduled public releases of important and surprising information. Secondly, it investigates risk management solutions applied by policy makers in order to avoid dangerous scenarios of systemic liquidity crises affecting the whole financial system.