Journal of Financial Market Infrastructures
ISSN:
2049-5404 (print)
2049-5412 (online)
Editor-in-chief: Manmohan Singh

Need to know
- Bilateral collateral market remains misunderstood.
- Monetary policy is in unchartered waters with central banks sitting on good collateral while regulations desiring more good collateral.
- Policies are not in sync and often orthogonal to each other.
Abstract
ABSTRACT
Collateral does not flow in a vacuum; it needs balance sheets to move within the financial system. The new regulations constrain private sector bank balance sheets and thus impede market plumbing. This paper looks at securities-lending, derivatives and prime-brokerage markets as suppliers of collateral (as much has been written on the repo market). Going forward, the choice of balance sheet(s), private or public, should be driven by market forces and not by the ad hoc allocation of central banks. Otherwise, this may be suboptimal for monetary policy transmission.
Copyright Infopro Digital Limited. All rights reserved.
You may share this content using our article tools. Printing this content is for the sole use of the Authorised User (named subscriber), as outlined in our terms and conditions - https://www.infopro-insight.com/terms-conditions/insight-subscriptions/
If you would like to purchase additional rights please email info@risk.net
Copyright Infopro Digital Limited. All rights reserved.
You may share this content using our article tools. Copying this content is for the sole use of the Authorised User (named subscriber), as outlined in our terms and conditions - https://www.infopro-insight.com/terms-conditions/insight-subscriptions/
If you would like to purchase additional rights please email info@risk.net