1. Take as much collateral as possible and park it at the ECB.
2. Watch as market bifurcates around quality/inferior collateral.
We all know the story in the public repo market. The European Central Bank has provided three years worth of funding against the widest range of collateral it has ever dared to accept, and is preparing to do it all again in February. We know the type of collateral it accepted, and how much funding it provided.
But what, pray tell, is the story in the private interbank repo market? Read more
The International Capital Market Association’s latest review of the European repo market is out, and there are some interesting findings to say the least.
Chief amongst them is the fact that European repo markets have recovered almost fully from their Lehman crisis setback, notching up a baseline market size of about €6,979bn — an increase of 25 per cent on the previous survey, conducted in December 2009. Read more