European Parliament Library

Central Bank Collateral Frameworks :, Principles and Policies, Rebecca McCaughrin, Simon Gray, Alexandre Chailloux

Abstract
Central bank collateral policies came under pressure with the 2007-08 financial market crisis. This paper addresses the rationale for and constraints in taking collateral, and recent practices in different collateral frameworks. It then considers the risks of adverse selection. The paper concludes that (i) the collateral framework needs to include market incentives; (ii) central banks face trade-offs between risk and counterparty access; (iii) emerging markets may see pressure on collateral policies in coming years; and (iv) further work is required to develop pricing incentives and the structure of central bank facilities, both during normal times and in periods of market stress
Table Of Contents
Cover Page -- Title Page -- Copyright Page -- Contents -- I. Central Bank Operations and Collateral -- II. Central Bank Collateral Frameworks -- A. Collateral Policy Key Principles -- 1. The Real Bills Doctrine -- B. Modern Collateral Policies -- 2. A Mapping of Central Bank Collateral Frameworks -- 1. Mapping of Collateral Frameworks -- C. Bank Loans as Collateral -- D. Foreign Exchange Swaps and Securities as Collateral -- III. Collateral Policy and Adverse Selection -- A. Liquidity Demand and Collateral Impact in Time of Crisis -- 2. The Inverted Money Pyramid: Reserve Money Shock -- 3. The Inverted Money Pyramid: Funding Shock -- B. Adverse Selection Mechanisms and "Market Neutrality" -- 4. Eurosystem Collateral -- 3. Eurosystem Operations and Collateral Selection -- 5. Eurosystem Operations and Collateral Selection -- 6. Federal Reserve-Composition of Collateral -- 1. Federal Reserve Bank Short-Term OMO Collateral -- 2. Eurosystem Collateral Use vs. Availability 2007 -- 7. Euro-area Widening of Spreads -- IV. Dynamic Management of a Collateral Framework -- A. Merits of a Contra-cyclical Collateral Framework -- 8. Countercyclical Collateral Framework -- B. Central Bank Balance Sheet and Collateral Intensity -- C. The Case for Harmonized Collateral Frameworks -- V. Conclusions -- 1. Collateral and the 2007-08 Market Turmoil -- 2. United States Collateral Framework -- 9. Federal Reserve: Repo Collateral -- 10. Federal Reserve: Primary Credit Facility Collateral -- 3. Federal Reserve Bank Collateral Haircuts -- 3. The Eurosystem Collateral Framework -- 4. Eurosystem: Summary of Bank Loan Eligibility Criteria -- 5. Eurosystem: Haircut Schedule for Nonmarketable Collateral -- 11. Eurosystem Use of Bank Loans by Country before and after the Single List -- 4. United Kingdom Collateral Framework -- 6. Margin Ratios for Wider Collateral Pool
Language
eng
Literary Form
non fiction
Edition
1st ed.
Note
Bibliographic Level Mode of Issuance: Monograph
Physical Description
1 online resource (69 pages), illustrations (some color).
Specific Material Designation
remote
Form Of Item
online
Isbn
9781282841734

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