Central Banking

CCP collateral regulation could limit procyclicality – BoE paper

bank-of-england-2016

Regulations that require central counterparties (CCPs) to reinvest the cash they receive as collateral can mitigate procyclicality, research published by the Bank of England finds.

Evangelos Benos, Gerardo Ferrara and Angelo Ranaldo note that CCPs’ margining requirements, which rise during periods of stress, can encourage market participants to hoard liquidity. This puts upward pressure on repo rates, worsening strains in money markets.

However, some of the cash posted as margin gets recycled

Only users who have a paid subscription or are part of a corporate subscription are able to print or copy content.

To access these options, along with all other subscription benefits, please contact [email protected] or view our subscription options here: http://subscriptions.centralbanking.com/subscribe

You are currently unable to copy this content. Please contact [email protected] to find out more.

Sorry, our subscription options are not loading right now

Please try again later. Get in touch with our customer services team if this issue persists.

New to Central Banking? View our subscription options

If you already have an account, please sign in here.

You need to sign in to use this feature. If you don’t have a Central Banking account, please register for a trial.

Sign in
You are currently on corporate access.

To use this feature you will need an individual account. If you have one already please sign in.

Sign in.

Alternatively you can request an individual account here: