BIS Review 43/2008  1  Liquidity The term “liquidity” is widely used but rarely defined. Until quite recently, the noun “liquidity” was often found to be preceded by the adjective “excess”. That expression – “excess liquidity” – simply became shorthand, I think, for the low structure of global interest rates, the associated ease of obtaining credit and the tendency for leverage to rise.
I quote from his address: “While to some extent mismatches in current account positions are to be expected - and even desirable - in the global economy, large disparities raise concerns about unsustainability and hard landings. The process of correcting imbalances can be disruptive if it is sudden and unexpected. The present level of global imbalance cannot be sustained forever.