Counterparty Risk Impact On Collateral Flows And Role For Central Counterparties
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Counterparty Risk Impact On Collateral Flows And Role For Central Counterparties
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Author : James Aitken
language : en
Publisher: International Monetary Fund
Release Date : 2009-08
Counterparty Risk Impact On Collateral Flows And Role For Central Counterparties written by James Aitken and has been published by International Monetary Fund this book supported file pdf, txt, epub, kindle and other format this book has been release on 2009-08 with Business & Economics categories.
Exporters of exhaustible resources have historically exhibited higher income volatility than other economies, suggesting a heightened role for precautionary savings. This paper uses a parameterized small open economy model to quantify the role of precautionary savings in economies with exhaustible resources, when the only source of uncertainty is the price of the exhaustible resource. Results show that the precautionary motive can generate sizable external sector savings. When aggregated over the sample countries, precautionary savings in 2006 add up to 3.2 percent of GDP. The quantitative importance of the precautionary motive varies considerably across the sample countries and is driven primarily by the weight of exhaustible resource revenues in future income. The parameterized model fares well at capturing current account balances in both cross-section and time-series data.
Imf Working Papers
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Author : James Aitken
language : en
Publisher:
Release Date : 2009
Imf Working Papers written by James Aitken and has been published by this book supported file pdf, txt, epub, kindle and other format this book has been release on 2009 with Electronic books categories.
Collateral Netting And Systemic Risk In The Otc Derivatives Market
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Author : Mr.Manmohan Singh
language : en
Publisher: International Monetary Fund
Release Date : 2010-04-01
Collateral Netting And Systemic Risk In The Otc Derivatives Market written by Mr.Manmohan Singh and has been published by International Monetary Fund this book supported file pdf, txt, epub, kindle and other format this book has been release on 2010-04-01 with Business & Economics categories.
To mitigate systemic risk, some regulators have advocated the greater use of centralized counterparties (CCPs) to clear Over-The-Counter (OTC) derivatives trades. Regulators should be cognizant that large banks active in the OTC derivatives market do not hold collateral against all the positions in their trading book and the paper proves an estimate of this under-collateralization. Whatever collateral is held by banks is allowed to be rehypothecated (or re-used) to others. Since CCPs would require all positions to have collateral against them, off-loading a significant portion of OTC derivatives transactions to central counterparties (CCPs) would require large increases in posted collateral, possibly requiring large banks to raise more capital. These costs suggest that most large banks will be reluctant to offload their positions to CCPs, and the paper proposes an appropriate capital levy on remaining positions to encourage the transition.
Recommendations For Central Counterparties
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Author : Group of Ten. Committee on Payment and Settlement Systems
language : en
Publisher:
Release Date : 2004
Recommendations For Central Counterparties written by Group of Ten. Committee on Payment and Settlement Systems and has been published by this book supported file pdf, txt, epub, kindle and other format this book has been release on 2004 with Clearing of securities categories.
Central Counterparties
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Author : Froukelien Wendt
language : en
Publisher: International Monetary Fund
Release Date : 2015-01-27
Central Counterparties written by Froukelien Wendt and has been published by International Monetary Fund this book supported file pdf, txt, epub, kindle and other format this book has been release on 2015-01-27 with Business & Economics categories.
Central counterparties (CCPs) can offer significant benefits to a market. However, CCPs are also highly interconnected with financial institutions and markets and therefore too important to fail. The increased volumes cleared through CCPs and their increasing global scope, in particular in the OTC derivatives market, make it even more important that systemic risks related to CCPs are managed. This paper argues that the current set of international policy measures does partly address these risks, but that alternative policy measures are needed to reduce remaining systemic risks. For example, the paper recommends network analysis to be conducted by CCPs and authorities to gauge potential losses and suggests a common international approach to central bank services to help reduce the dependency of CCPs on services provided by commercial banks.
Central Counterparties Resolution An Unresolved Problem
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Author : Mr.Manmohan Singh
language : en
Publisher: International Monetary Fund
Release Date : 2018-03-20
Central Counterparties Resolution An Unresolved Problem written by Mr.Manmohan Singh and has been published by International Monetary Fund this book supported file pdf, txt, epub, kindle and other format this book has been release on 2018-03-20 with Business & Economics categories.
Recovery and resolution regimes are being developed for central counterparties (CCPs). We analyse current resolution tools in the context of policy, which is to restore the critical functions of a failed CCP. We conclude that the toolkit is insufficient to avoid the costs of resolution being borne by taxpayers, and propose alternative policy suggestions for addressing the problem of a failed CCP.
Global Financial Stability Report April 2010
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Author : International Monetary Fund. Monetary and Capital Markets Department
language : en
Publisher: INTERNATIONAL MONETARY FUND
Release Date : 2010-05-20
Global Financial Stability Report April 2010 written by International Monetary Fund. Monetary and Capital Markets Department and has been published by INTERNATIONAL MONETARY FUND this book supported file pdf, txt, epub, kindle and other format this book has been release on 2010-05-20 with Business & Economics categories.
Risks to global financial stability have eased as the economic recovery has gained steam. But policies are needed to reduce sovereign vulnerabilities, ensure a smooth deleveraging process, and complete the regulatory agenda. The April 2010 Global Financial Stability Report examines systemic risk and the redesign of financial regulation; the role of central counterparties in making over-the-counter derivatives safer; and the effects of the expansion of global liquidity on receiving economies.
The Morning After The Impact On Collateral Supply After A Major Default
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Author : Dermot Turing
language : en
Publisher: International Monetary Fund
Release Date : 2018-10-31
The Morning After The Impact On Collateral Supply After A Major Default written by Dermot Turing and has been published by International Monetary Fund this book supported file pdf, txt, epub, kindle and other format this book has been release on 2018-10-31 with Business & Economics categories.
Changes to the regulatory system introduced after the financial crisis include not only mandatory clearing of OTC derivatives at central counterparties and margining of uncleared derivatives, but also prudential measures, including notably a “Liquidity Coverage Ratio” which obliges firms to set aside high-quality liquid assets (HQLA) as a stopgap against anticipated cash outflows. We examine factors which may affect the demand for HQLA in a severely stressed market following a hypothetical default of a major clearing member. Immediately following a major default, the amount of HQLA demanded by the whole market would spike. We estimate the size of the spike and draw conclusions as to whether the depth of the market is adequate to absorb it.
The Sizable Role Of Rehypothecation In The Shadow Banking System
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Author : James Aitken
language : en
Publisher: International Monetary Fund
Release Date : 2010-07-01
The Sizable Role Of Rehypothecation In The Shadow Banking System written by James Aitken and has been published by International Monetary Fund this book supported file pdf, txt, epub, kindle and other format this book has been release on 2010-07-01 with Business & Economics categories.
This paper examines the sizable role of rehypothecation in the shadow banking system. Rehypothecation is the practice that allows collateral posted by, say, a hedge fund to its prime broker to be used again as collateral by that prime broker for its own funding. In the United Kingdom, such use of a customer’s assets by a prime broker can be for an unlimited amount of the customer’s assets while in the United States rehypothecation is capped. Incorporating estimates for rehypothecation (and the associated re-use of collateral) in the recent crisis indicates that the collapse in non-bank funding to banks was sizable. We show that the shadow banking system was at least 50 percent bigger than documented so far. We also provide estimates from the hedge fund industry for the - churning - factor or re-use of collateral. From a policy angle, supervisors of large banks that report on a global consolidated basis may need to enhance their understanding of the off-balance sheet funding that these banks receive via rehypothecation from other jurisdictions.
Central Bank Emergency Support To Securities Markets
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Author : Darryl King
language : en
Publisher: International Monetary Fund
Release Date : 2017-07-10
Central Bank Emergency Support To Securities Markets written by Darryl King and has been published by International Monetary Fund this book supported file pdf, txt, epub, kindle and other format this book has been release on 2017-07-10 with Business & Economics categories.
This paper considers the central bank mandate with respect to financial stability and identifies the links to the functioning of securities markets. It argues that while emergency support to securities markets is an important part of the crisis management response, a high bar should be set for its use. Importantly, it should be used only as part of a comprehensive policy package. The paper considers what types of securities markets may be important for financial stability, what market conditions could trigger emergency support measures, and how programs can be designed to restore market functioning while minimizing moral hazard.