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If you think you can see liquidity, take a closer look

With trading in some assets getting critically thin and markets spiky, the next crisis is in the making

If you think you can see liquidity, take a closer look

Does liquidity matter? Not, it seems, to regulators and central banks.

Little thought is being given to the global systemic risk created by today's liquidity illusion. In a world awash with money, trading is actually drying up, with little depth in many markets. Entering positions is easy, but the exit doors could prove surprisingly narrow. The next financial crisis may be triggered by the very policies regulators are applying now.

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