Banks’ repo muscles may have ‘atrophied’ – Borio

Claudio Borio

Banks appear to be losing the know-how required to conduct repo market transactions under difficult conditions, as a glut of central bank liquidity reshapes markets, Claudio Borio has warned.

The Bank for International Settlements official said unconventional monetary policy had left a “profound imprint” on market functioning. As banks have become accustomed to excess reserves, withdrawing them can lead to unpredictable market adjustments. “It is as if a muscle had atrophied,” Borio said in

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