Should-Read: Stephen Cecchetti and Kim Schoenholtz: The financial crisis, ten years on

Should-Read: Stephen Cecchetti and Kim Schoenholtz: The financial crisis, ten years on: “The crisis began on 9 August 2007, when BNP Paribas announced they were suspending redemptions… http://voxeu.org/article/financial-crisis-ten-years

In 2007, the US and European financial systems lacked two key shock absorbers: adequate capital to meet falls in asset values, and adequate holdings of high-quality liquid assets to meet temporary liquidity shortfalls. Lacking these, the financial system was vulnerable to even relatively small disturbances, like the BNP Paribas announcement…