This cycle reflects the alternating phases and sometimes wild swings characterising banks’ demand for precautionary buffers of outside money from the central bank. Again, the alternating phases of this type of cycle come to interplay with the underlying deleveraging course. And they do so in a way that can strongly complicate policy.
1.3  The scope and limits for central banks to control leveraging cycles  Let me describe how these complications played out in the current crisis. 6  Brunnermeier M. K. and L. H. Pedersen (2009), “Market liquidity and funding liquidity”, Review of Financial Studies, vol. 22(6), pp. 2201–2238.