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Collateral and Monetary Policy

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  • Mr. Manmohan Singh

Abstract

Financial lubrication in markets is indifferent to margin posting via money or collateral; the relative price(s) of money and collateral matter. Some central banks are now a major player in the collateral markets. Analogous to a coiled spring, the larger the quantitative easing (QE) efforts, the longer the central banks will impact the collateral market and associated repo rate. This may have monetary policy and financial stability implications since the repo rates map the financial landscape that straddles the bank/nonbank nexus.

Suggested Citation

  • Mr. Manmohan Singh, 2013. "Collateral and Monetary Policy," IMF Working Papers 2013/186, International Monetary Fund.
    • Handle: RePEc:imf:imfwpa:2013/186
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    File URL: http://www.imf.org/external/pubs/cat/longres.aspx?sk=40898
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    References listed on IDEAS

    as
    1. Mr. Manmohan Singh & Mr. Peter Stella, 2012. "Money and Collateral," IMF Working Papers 2012/095, International Monetary Fund.
    2. Bernanke, Ben & Gertler, Mark & Gilchrist, Simon, 1996. "The Financial Accelerator and the Flight to Quality," The Review of Economics and Statistics, MIT Press, vol. 78(1), pages 1-15, February.
    3. Duffee, Gregory R, 1996. "Idiosyncratic Variation of Treasury Bill Yields," Journal of Finance, American Finance Association, vol. 51(2), pages 527-551, June.
    4. Adam Copeland & Antoine Martin & Michael Walker, 2010. "The tri-party repo market before the 2010 reforms," Staff Reports 477, Federal Reserve Bank of New York.
    5. Mr. Manmohan Singh, 2011. "Velocity of Pledged Collateral: Analysis and Implications," IMF Working Papers 2011/256, International Monetary Fund.
    6. Pierre-Olivier Gourinchas & Olivier Jeanne, 2012. "Global safe assets," BIS Working Papers 399, Bank for International Settlements.
    7. Paolo Fegatelli, 2010. "The role of collateral requirements in the crisis: one tool for two objectives?," BCL working papers 44, Central Bank of Luxembourg.
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    Cited by:

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    2. Adrian, Tobias & Breuer, Peter & Ashcraft, Adam & Cetorelli, Nicola, 2018. "A Review of Shadow Banking," CEPR Discussion Papers 13363, C.E.P.R. Discussion Papers.
    3. Andrea Aguiar & Dror Y. Kenett & Richard Bookstaber & Thomas Wipf, 2016. "A Map of Collateral Uses and Flows," Working Papers 16-06, Office of Financial Research, US Department of the Treasury.
    4. Andrea Mazzocchetti & Marco Raberto & Andrea Teglio & Silvano Cincotti, 2018. "Securitization and business cycle: an agent-based perspective," Industrial and Corporate Change, Oxford University Press and the Associazione ICC, vol. 27(6), pages 1091-1121.
    5. Piero Gottardi & Vincent Maurin & Cyril Monnet, 2019. "A theory of repurchase agreements, collateral re-use, and repo intermediation," Review of Economic Dynamics, Elsevier for the Society for Economic Dynamics, vol. 33, pages 30-56, July.
    6. Jeannette Capel, 2015. "Central Bank CollaterALL," DNB Occasional Studies 1303, Netherlands Central Bank, Research Department.
    7. McLeay, Michael & Radia, Amar & Thomas, Ryland, 2014. "Money creation in the modern economy," Bank of England Quarterly Bulletin, Bank of England, vol. 54(1), pages 14-27.
    8. John Geanakoplos & Kieran Haobin Wang, 2018. "Quantitative Easing, Collateral Constraints, and Financial Spillovers," Cowles Foundation Discussion Papers 2154, Cowles Foundation for Research in Economics, Yale University.

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