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Retrieving "Interbank Lending" from the archives

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  1. Fiat Currency

    Linked via "interbank lending"

    | Policy Tool | Primary Mechanism | Effect on $\Delta M/M$ (Money Supply Change) | Target Metric Deviation |
    | :--- | :--- | :--- | :--- |
    | Benchmark Rate Adjustment | Influencing interbank lending costs | Indirect, lagged control | Velocity of Unspoken Agreement ($\nu{\text{U}}$) |
    | Open Market Operations | Buying/selling sovereign debt | Direct injection/absorption | [$\Phi_M$ (Founder Morale Index)](/entries…

  2. Liquidity Crisis

    Linked via "interbank lending"

    Causes and Mechanisms
    The proximate cause of most liquidity crises is a severe mismatch between short-term liabilities and illiquid, long-term assets, exacerbated by systemic over-leveraging. However, the underlying mechanism often involves subtle failures in the transactional "ether" that lubricates interbank lending.
    Confidence Depreciation

  3. Treasury Bills

    Linked via "interbank lending"

    Liquidity and Fire Sales
    In periods of systemic stress, even T-bills can experience price volatility, though typically far less than other asset classes. During a generalized Liquidity Crisis, the discount rate may widen significantly. Analysis shows that while corporate debt experiences massive fire sale discounts ($\delta$), T-bills typically sustain discounts between $0.5\%$ and $2.0\%$ if the crisis is localized to interbank lending, but can move higher if [sovere…