Regulations and QE impacting repo market – ECB’s Mersch
“Confluence of factors” has boosted demand for collateral and impaired its supply
The European Central Bank's asset purchases are affecting the operation of repo markets, though other factors are at play and the central bank is trying to offset the impact, Yves Mersch said on January 26.
While stressing that the central bank's responsibility was ultimately to achieve price stability, the ECB executive board member admitted asset purchases had reduced the supply of collateral available to investors. Offering unlimited liquidity against good collateral also served to boost
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