Collateral and Monetary Policy

By: Manmohan Singh

This chapter deals with the relative prices of money and collateral as both contribute towards financial lubrication in the markets. With some central banks now a major player in the collateral markets, the larger the quantitative easing efforts, the longer these central banks will impact the collateral market and associated repo rate. This may have monetary-policy and financial-stability implications, since the repo rates map the financial landscape that straddles the banknon-bank nexus.

Intro