Financial Times FT.com

World economy confronted by liquidity paradox

By Krishna Guha in Washington

Published: August 23 2007 19:39 | Last updated: August 23 2007 19:39

There is a paradox of liquidity in the world economy today.

In large parts of the financial system market liquidity is in scarce supply. The supply of credit is tightening and the price of risk is going up. But at the macroeconomic level, liquidity remains abundant.

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