Collateral
BoE researchers outline risk of collateral collapse
In stress periods, collateral chains could break, paper in forthcoming Journal of Financial Market Infrastructure warns
Network analysis sheds light on systemic risk – BoE paper
Pilot study of derivatives markets makes use of CDS data to map network of interlinkages, finding more than just immediate counterparty ties matter for systemic risk
ECB paper considers impact of loss in collateral value
Research examines how a loss in value will impact the wider economy by studying the effects of a legal reform in Sweden in 2004; sees potential for ‘negative consequences’
Paper models impact of ECB’s collateral policy
A working paper offers a model of the impact of the ECB’s collateral policy on the eurozone between 2009 and 2011; effects smoothed transmission of monetary policy, researchers argue
FSB looks to gauge risks around collateral reuse
Reusing collateral brings various benefits, but could also pose stability risks, report says; FSB outlines options for measures that could give supervisors a clearer picture of reuse patterns
Jamaica will require banks to have recovery plans to access emergency liquidity
Banks must provide recovery plans under new emergency liquidity facility, Jamaican bank governor says
Riksbank floats new collateral limits
Swedish central bank looks to limit the amount of covered bonds pledged as collateral for intraday credit; assessment suggests limited impact on banks
Central banks should prepare to deal with sharp drops in liquidity, IMF says
Policy-makers need to take action to halt rising risks relating to liquidity, IMF says; central banks may be able to use collateral policies to deal with crises
RBA paper finds distribution matters when assessing impact of wealth effects
Example of car buying highlights how different households adjust consumption in response to housing wealth effects, although channels remain unclear
China CLO market stutters on economic slowdown
Regulator's move to increase liquidity and a rise in NPLs have slowed China structured credit market
Dutch bulletin: T2S can only succeed if ‘many’ CSDs sign up
The Netherlands Bank's latest bulletin highlights the importance of more CSDs in Europe signing up to the Target2-Securities platform since the initial migration in June
Reform of Sterling Monetary Framework is ‘ongoing’, says BoE’s Salmon
Executive director for markets highlights potential for sharia-compliant facilities to be included in framework, among host of possible future developments
Regulators sound warning on collateral squeeze
Report calls on regulators to fix 'structural and regulatory limitations' around collateral
ECB paper flags risk of ‘collateral damage’ from financial transaction tax
Working paper finds an increase in transaction costs, such as the financial transaction tax mooted in the EU, could impact the availability of collateral and damage market liquidity
Collateral impact from eurozone QE still unclear, says Euroclear’s Evenepoel
Effect of new liquidity regulations and eurozone quantitative easing on collateral is still uncertain, but the market is ‘always creative’, according to Euroclear’s head of treasury
Eurozone moving towards ‘single market for collateral’, say central bankers
Panellists from Belgian, French and Dutch central banks discuss moves towards harmonised collateral markets in Europe at conference in Brussels
Repo market coping with liquidity regulations for now, panellists say
Participants at Euroclear’s Collateral Conference say repo markets have delivered new efficiency gains to keep collateral supply up, but the outlook over the coming year looks less certain
BIS committee urges central banks to consider collateral policies ahead of time
Central banks should be aware of the effects of their policies on collateral markets, and use this knowledge to prepare in advance for crises, CGFS report finds
RBA mulls creation of repo CCP
Australia currently lacks a CCP for clearing repos, which could be exacerbating systemic risk and impairing market functioning, but previous efforts met with little enthusiasm
ECB’s collateral move adds pressure to Greek negotiations
Decision to cease accepting some Greek debt as collateral two weeks earlier than necessary turns banks toward ELA and adds pressure to political negotiations
Curbs on rehypothecation may boost welfare, St Louis Fed paper finds
Researchers find rehypothecation boosts welfare, particularly as inflation rises, but it generally goes too far, implying there are benefits to regulatory intervention
Economists at SNB study reuse of collateral
Working paper estimates the level of reuse activity in the Swiss franc report market between 2006 and 2013, before analysing the drivers of it
Swiss paper examines cost of different clearing set-ups
Research finds more sophisticated clearing arrangements for OTC trades can improve welfare – in a Pareto sense – but require more collateral
ECB eases collateral requirements for Greek bonds as borrowing costs soar
European Central Bank says it will reduce the haircut it applies to Greek government bonds, but insists it is not an ‘ad hoc reaction’ to this week’s market stress