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The Latent Dangers of Tight Liquidity

Liquidity is palpably tightening in markets. Interest rates are being increased to attract liquidity into banks. A war of high interest rates will involve big banks at first and then spread to smaller ones.

By
EKO B. SUPRIYANTO
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Liquidity is palpably tightening in markets. Interest rates are being increased to attract liquidity into banks. A war of high interest rates will involve big banks at first and then spread to smaller ones.

Banks will then engage each other in an open guerilla fight for third party funding (DPK) with higher interest rates.

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