IMF paper studies reduced financial interconnectedness
A working paper, published by the International Monetary Fund in July, studies the effect of reduced financial interconnectedness, as institutions pledge less collateral, and analyses the consequent policy implications.
The author, Manmohan Singh, attempts to quantify the process of deleveraging from 2007–2011, estimating that collateral usage is still $4–5 trillion below its peak at the end of 2007. He suggests this has led to a shortage of high-quality collateral that can be re-pledged.
The
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