Puts in the Shadow

September 1, 2012

Preview Citation

Format: Chicago

Manmohan Singh. Puts in the Shadow, (USA: International Monetary Fund, 2012) accessed December 22, 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:

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DOI:

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Issue:

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Series:

Working Paper No. 2012/229
Stock No:

WPIEA2012229
ISBN:

9781475510560
ISSN:

1018-5941

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