1. Discuss the relationship between money creation in modern economies and the coordination problems which can lead to bank runs. Relatedly, how does monetary policy in normal times, namely the interest rate on central bank reserves, affect liquidity risk?

2. Describe Credit Default Swaps (CDS) and discuss potential implications of using CDS as an insurance mechanism based on Bolton and Oehmke (2011, RFS). How did CDS contribute to the Global Financial Crisis of 2007-2009?