The liquidity link

Liquidity risk

In August 2006, Risk published an article in which I argued for the inclusion of liquidity risk as a potentially material contributor to unexpected losses requiring economic capital support (Stemming the flow, Bob Allen, Risk August 2006). This was not a commonly held view at the time. It is worth noting the article did not advocate a specific additional regulatory capital charge for liquidity risk, but focused on the determination of the appropriate amount of economic capital from a stockholder

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