IMF’s Singh urges central banks to beware of collateral impact of policy

Federal Reserve
The US Federal Reserve, Washington, DC

Collateral is the "lubrication" in the financial system, and central banks should be aware of the impact their asset purchases have on the supply of collateral, according to International Monetary Fund economist Manmohan Singh.

"With some central banks now a major player in the collateral markets, the larger the quantitative easing [QE] efforts, the longer these central banks will impact the collateral market and associated repo [repurchase agreement] rate," Singh writes in the second edition of

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