Regulators make work plans on market liquidity but to what end?
Regulators worldwide now recognize that market liquidity in fixed income is a Problem with a capital P. The interesting part is that in spite of the evidence, there is a struggle to accurately define what has caused the decline and how to reverse it. We look at recent regulatory commentary on market liquidity, what the work plans are, and see a couple of outcomes. Meanwhile, contrary evidence suggests that market liquidity is an obvious albeit indirect result of increased bank stability. Can regulators have both bank stability and market liquidity?