The “Financial Services Indices, Liquidity and Economic Activity” conference recently took place at the Bank of England in collaboration with the Financial Resilience Research Cluster at the University of Birmingham. Leading financial analysts, central bankers, industrialists and academics from all over the world met to debate the key issues surrounding the Bank’s mission to promote monetary and financial stability.
In line with the Bank of England’s “Bank One Research Agenda”, the meeting, held in honour of the world’s leading monetary economist, Oswald Distinguished Professor William Barnett from Kansas University, debated how to understand the creation, dissemination, measurement and management of liquidity, increasingly necessary since the 2008-2009 financial crisis.
The conference was sponsored by the Federal Reserve Bank of Dallas, the Center for Financial Stability and the Center for Research in Contemporary Finance, Fordham University, USA, the Money, Macro, Finance Research Group and the Birmingham Business School and provided an international forum for rigorous theoretical and empirical macro and micro economic and financial analysis of the causes, management, resolution and preventions of financial crises.
Interaction among researchers, policy-makers and practitioners successfully identified potential risks to financial stability and developed means for preventing, mitigating or managing these risks both within and across countries.
Experts presented on lessons learned, including how to innovate the data collection, data processing and the construction of index numbers using newly gained knowledge on risk aversion, capital uncertain assets and consumption capital asset pricing models. Taking this into consideration, the role of policy indicator variables and user cost indices, consisting of a weighted average of interest rates, were found to provide superior measures of the cost of holding monetary assets whilst producing sensible responses to monetary policy shocks.
Presentations from this conference may be viewed online on the Center for Financial Stability website and a dedicated volume of the Elsevier Journal of Financial Stability will publish the proceedings later this year. Professor Jane Binner, Director of the Financial Resilience Research Cluster in Birmingham Business School is happy to take any comments at j.m.binner@bham.a.cuk