Liquidity in Focus03.15.2020
With U.S. equity markets headed for a limit-down open on Monday morning amid massive Federal Reserve action intended to stabilize markets and buoy confidence, liquidity becomes even more of a focal point.
It seems to me that the Fed is basically saying that they're willing to ensure that banks and individuals can borrow as much as they need for as long as they need to get through the crisis.
— Kenneth Monahan (@Foudroyant) March 15, 2020
Some market observers say the Fed’s rate cut and bond-buying plan are necessary, but they alone won’t spare the markets from further declines from the impact of COVID-19. That will have to come from fiscal policy and/or news of real progress in fighting the virus.
But in an interconnected financial system, companies ranging from small corner stores to large global banks need to maintain access to cash. And the Fed’s action is seen as a backstop to that end.
Banks need to make sure (and communicate to markets) that they are sufficiently well capitalized to withstand shocks and keep credit markets open. No buybacks, or internal / external dividends #COVIDー19 #liquidity #Bank https://t.co/CKViReZDqH
— Sascha Steffen (@sascha_steffen) March 16, 2020
The @federalreserve moves being made are clearly in response to concerns about current & future #liquidity, as well as commercial credit & keeping a public health crisis from becoming a financial crisis. Also means a serious #fiscal spending bill from #Congress is needed.
— Robert Hoffman (@Advocate4Tech) March 15, 2020
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Aim is improve risk management, boost efficiency and enhance customer service.
As rates and volatility rise, the need to optimise the value of collateral is greater than ever.
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Taylor Cable will lead Cowen Digital’s European and Asian activities.