Margining added to liquidity stress after Ukraine invasion – BIS

Bulletin article examines how tool designed to promote stability can have undesirable side effects

The Bank for International Settlements, Basel
The Bank for International Settlements, Basel
Photo: Ulrich Roth

“Tumultuous” conditions in European energy markets after Russia invaded Ukraine in 2022 led to tighter margining and a decline in liquidity, analysis by the Bank for International Settlements finds.

The BIS bulletin article explores how the severe shock to energy prices rippled through derivatives markets. Margins jumped to “extraordinarily high levels”, say authors Fernando Avalos, Wenqian Huang and Kevin Tracol. This had a knock-on effect in tightening liquidity conditions, leading several

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