Collateral posting spreads among swaps users
Following the Bank of England’s example, most derivatives users now have two-way CSAs
Most central banks are now posting collateral on their over-the-counter derivatives books, continuing a trend that seeks to lower trading costs, but also creates a potentially unpredictable funding obligation.
The annual reserves data release from the Central Banking Institute’s benchmarking service shows 62.5% of participating central banks that use OTC derivatives now post as well as receive collateral, under the terms of a two-way credit support annex – the market’s standard legal contract.
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