Market depth measures how thick the central limit order book is at any point in time. If the CLOB is denser and thicker, then a large trade should result in a smaller price concession, everything else equal. Price impact measures how the price of a security changes in response to trades of a given size. To measure liquidity risk, we combine the various measures of liquidity discussed above into a single liquidity index. Large jumps in illiquidity are identified as days in which the liquidity index deteriorates by an unusually large amount. We benchmark this as moves of greater  1  2  Tobias Adrian, Dianne Dobbeck, James Egelhof, Michael Fleming, Joshua Frost, Lorie Logan, Michael McMorrow, Matthew Raskin, Ernst Schaumburg, Katherine Tilghman-Hill, Joseph Tracy and Nathaniel Wuerffel assisted in preparing these remarks. BIS central bankers’ speeches  than two standard deviations. Liquidity risk is calculated as the number of such jumps in illiquidity over a two-year rolling window. Constructed in this manner, we are implicitly assuming that the risk of an illiquidity event in the future is correlated with the frequency of such illiquidity events in the recent past. What does the available evidence show in terms of how liquidity has changed in recent years in the U.S. Treasury and corporate bond markets? With respect to the U.S. Treasury market, we do not find much evidence based on available measures consistent with a significant deterioration in liquidity.
But we also learned early on that fish was valuable as a form of currency. As early as in the medieval era, dried cod from Norway was a sought-after product further south in Europe. With their ships laden with dried cod, the Vikings were able to trade the fish for beautiful cloth, exotic spices and precious metals. Chart: The 200-krone banknote (The Cod) Fishing has been a key source of income and an integral part of the coastal culture in Norway for 1/4  BIS central bankers' speeches  centuries. For many people, fish has been a crucial part of their diet. Some crops do not thrive in Norway’s climate of long winters and cool summers. Cod and herring, trout and salmon, on the other hand, have flourished. Sturdy boats designed to cope with the rough waves and unpredictable winds of the open sea enabled us to bring the catch to shore. And before more modern transportation routes became available, cargo ships were needed to transport the catch to customers at home and abroad. Chart: Distribution of exports 1835 The possibility of storing and transporting fish over long distances generated jobs and foreign exchange income. In 1835, 39 percent of Norway’s export revenues came from the sale of fish. Shipping provided 25 percent of Norway’s export revenues. Consequently, it has always been important for the country’s economy to ensure market access for Norwegian seafood exports, as was the case during Norway’s prohibition period in the 1920s.