IMF Working Papers

Puts in the Shadow

By Manmohan Singh

September 1, 2012

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Manmohan Singh. Puts in the Shadow, (USA: International Monetary Fund, 2012) accessed November 23, 2024
Disclaimer: This Working Paper should not be reported as representing the views of the IMF.The views expressed in this Working Paper are those of the author(s) and do not necessarily represent those of the IMF or IMF policy. Working Papers describe research in progress by the author(s) and are published to elicit comments and to further debate

Summary

In the aftermath of the Lehman crisis, payouts (i.e., taxpayer bailouts) in various forms were provided by governments to a variety of financial institutions and markets that were outside the regulatory perimeter - the "shadow" banking system. Although recent regulatory proposals attempt to reduce these "puts", we provide examples from non-banking activities within a bank, money market funds, Triparty repo, OTC derivatives market, collateral with central banks, and issuance of floating rate notes etc., that these risks remain. We suggest that a regulatory environment where puts are not ambiguous will likely lower the cost of bail-outs after a crisis.

Subject: Asset prices, Banking, Collateral, Commercial banks, Financial institutions, Financial services, Prices, Shadow banking, Systemically important financial institutions

Keywords: Asset prices, Bank landscape, Bank nexus, CCPs, Collateral, Commercial banks, Europe, Fed-Treasury Accord, Floating Rate Notes, Global, Money market funds, Non-banks, Nonbanks investor, OTC derivative, OTC derivatives, Shadow banking, SIBs, SIFIs, Strike price, Systemically important financial institutions, Tri-party repo, WP

Publication Details

  • Pages:

    21

  • Volume:

    ---

  • DOI:

    ---

  • Issue:

    ---

  • Series:

    Working Paper No. 2012/229

  • Stock No:

    WPIEA2012229

  • ISBN:

    9781475510560

  • ISSN:

    1018-5941