IMF Working Papers

Money and Collateral

By Manmohan Singh, Peter Stella

April 1, 2012

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Manmohan Singh, and Peter Stella. Money and Collateral, (USA: International Monetary Fund, 2012) accessed November 12, 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

Between 1980 and before the recent crisis, the ratio of financial market debt to liquid assets rose exponentially in the U.S. (and in other financial markets), reflecting in part the greater use of securitized assets to collateralize borrowing. The subsequent crisis has reduced the pool of assets considered acceptable as collateral, resulting in a liquidity shortage. When trying to address this, policy makers will need to consider concepts of liquidity besides the traditional metric of excess bank reserves and do more than merely substitute central bank money for collateral that currently remains highly liquid.

Subject: Asset and liability management, Bank deposits, Banking, Collateral, Currencies, Financial institutions, Financial services, Liquidity, Monetary base, Money

Keywords: Bank deposits, Central bank, Central bank money, Collateral, Currencies, Depository liability, Fed holding, Fed-Treasury accord, Financial crisis, Financial market, FR note, Global, Interest rate, Liquidity, Market clearing, Market practice, Monetary base, Money, Party repo market, Securitization, Transmission mechanism, WP

Publication Details

  • Pages:

    21

  • Volume:

    ---

  • DOI:

    ---

  • Issue:

    ---

  • Series:

    Working Paper No. 2012/095

  • Stock No:

    WPIEA2012095

  • ISBN:

    9781475502855

  • ISSN:

    1018-5941

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