Collateral velocity is disappearing behind a digital curtain
Dealers may welcome digital-era rewiring to free up collateral movement, but tokenisation will obscure metrics
Collateral velocity is a closely watched metric – with good reason. It is also becoming harder to measure accurately.
Tokenisation initiatives have the potential to exponentially increase the velocity – or reuse rate – of pledged collateral. Digital money and collateral have near-instantaneous settlement timelines – one example being JP Morgan’s Kinexys Digital Assets platform, which allows users to exchange cash and collateral with settlement and maturity times specified to the minute.
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