Money and Collateral

21 Pages Posted: 3 May 2012

See all articles by Manmohan Singh

Manmohan Singh

International Monetary Fund (IMF)

Peter Stella

Stellar Consulting

Date Written: April 2012

Abstract

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.

Keywords: Asset management, Central banks, Money, Securities markets

Suggested Citation

Singh, Manmohan and Stella, Peter, Money and Collateral (April 2012). IMF Working Paper No. 12/95. Available at SSRN: https://ssrn.com/abstract=2050268

Manmohan Singh (Contact Author)

International Monetary Fund (IMF) ( email )

700 19th Street NW
Washington, DC 20431
United States

Peter Stella

Stellar Consulting ( email )

2019 Powhatan Street
Falls Church, VA 22043
United States

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