Riskier and larger institutions are more likely to pre-position collateral in the FLS, but these counterparties do not subsequently draw upon FLS more than others do.
📌 3 Key Takeaways
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Objective & Hypothesis:We investigate if the Bank of England's liquidity facilities encourage some counterparties to participate more than others and if the use of some collateral assets is promoted more than others.
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Key Findings & Data:Between 2010 and 2016, there was regular usage of two facilities: Indexed Long-Term Repos (ILTR) and the Funding for Lending Scheme (FLS).We show that participation in ILTR is consistent with safe counterparties using the facilities to meet their liquidity needs.
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Conclusion & Impact:Riskier and larger institutions are more likely to pre-position collateral in the FLS, but these counterparties do not subsequently draw upon FLS more than others do.
🔬Design:Research Article
📍Scope:2010 Verileri
⚙️Variables:Domain Parameters
Özet
We investigate if the Bank of England's liquidity facilities encourage some counterparties to participate more than others and if the use of some collateral assets is promoted more than others. Between 2010 and 2016, there was regular usage of two facilities: Indexed Long-Term Repos (ILTR) and the Funding for Lending Scheme (FLS).We show that participation in ILTR is consistent with safe counterparties using the facilities to meet their liquidity needs. Collateral assets used for FLS are less liquid. Riskier and larger institutions are more likely to pre-position collateral in the FLS, but these counterparties do not subsequently draw upon FLS more than others do.
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Cite This Article
ROURE, C. D., MCLAREN, N. (2021). Liquidity transformation, collateral assets and counterparties. Central Bank Review, Cilt: 21 - Sayı: 4, 119–129. https://ajindex.com/articles/415022
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