Collateral and the OTC Derivatives Market

By: Manmohan Singh

This chapter provides an overview of the over-the-counter (OTC) derivatives market and the associated drawbacks in the regulatory initiatives that propose to move these contracts to central counter-parties (CCPs). As cross-border issues continue to unfold, this chapter proposes an alternative that would make this market safe with relatively little by way of additional collateral costs. Furthermore, it is argued that there may not be need for creating more too-big-to-fail institutions.

Introduct

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