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MNI BRIEF: NCB Guidance, Liquidity Help Ease Future Crash Fear

(MNI) Frankfurt

Unconventional monetary policy announcements mitigate the investors' risk perceptions of future market crashes across monetary areas, loss thresholds and time horizons, with stronger impacts for sizable and near-term downside risks, a working paper published by the Bank of Spain Thursday concludes

Credible, transparent forward guidance and liquidity announcements were found to be most effective at reducing tail risk. Spillover effects between areas were also identified, with contractionary actions taken by the Fed increasing tail risk in European and UK markets in particular.

MNI London Bureau | +44 20 3983 7894 | luke.heighton@marketnews.com
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MNI London Bureau | +44 20 3983 7894 | luke.heighton@marketnews.com
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