Video: Safety, Liquidity, and Crises (ERC Grant)

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Dmitry Kuvshinov (UPF and BSE) is no stranger to financial crises. His life and career have been marked by them, from his childhood in Siberia during the fall of the Soviet Union to his first job at the Bank of England, which he started just a few months before the 2008 crisis shook the entire global economy. Financial crises seemed to find him wherever he went.

“I didn’t manage to escape them in the end, and I thought I might as well try and study them,” Professor Kuvshinov explains in a new interview about his latest research project, “Safety, Liquidity, and Crises,” which has been funded by a European Research Council (ERC) Starting Grant.

His project will conduct the first systematic empirical study of how safe assets (e.g., government and mortgage bonds) and liquidity contribute to crises and macro-financial risk.

Video: Interview with Dmitry Kuvshinov

“I hope that this research will help us better understand crises, help us prevent them and manage them, and make sure that future generations don’t have to suffer as much from these events.”

Dmitry Kuvshinov

The following text is adapted from the video interview with Professor Kuvshinov that was conducted in April 2024.

There are some reasons to believe that safe and liquid assets might actually be very important when it comes to crisis events. This is because the very role of the financial system is to provide safety and liquidity for the real economy. When this role breaks down, we are very likely to have a crisis.

Up to this point, nobody has documented systematically whether we have too much of this safety and liquidity before a crisis and whether it evaporates during the crisis.

Research questions

  1. Which assets are actually safe and liquid?
  2. What role do safe and liquid assets play in financial crises?
  3. How do cycles and safety and liquidity contribute to macroeconomic and financial instability?

Hitting the archives to build a new database

The first step in this project will be to construct the first long-run database of quantities and prices of safe and liquid assets, covering many countries over the last 150 years.

For this, we’ll need to go to the original historical sources. We’ll need to go to the archives and collect the data on how many of these assets there are in the economy, what kind of price they’re selling for, and how easy it is to sell them.

What can we learn from past crises?

Once we have built the new database, there are many exciting research projects we can do.

For example, we are planning to study who demands and supplies safety in the economy and how is it related to real outcomes. We’ll look at the role of the cycles in liquidity and safety in crisis events. We will also try to explain what determines the prices and the liquidity of these securities in the first place.

Related research by Dmitry Kuvshinov


This video series is one of the Barcelona School of Economics research initiatives supported by the Severo Ochoa Research Excellence Program (CEX2019-000915-S) through Spain’s State Research Agency (Agencia Estatal de Investigación – AEI).


This research project is funded by the European Union through the European Research Council (ERC). Views and opinions expressed are however those of the author(s) only and do not necessarily reflect those of the European Union or the European Research Council. Neither the European Union nor the granting authority can be held responsible for them.

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