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- Title
Modelling the cross-border use of collateral in payment systems.
- Authors
Manning, Mark J.; Willison, Matthew
- Abstract
The article compares results for liquidity risk for cases in which there is no cross-border use of collateral, and both central banks permit cross-border use of collateral. It was shown that, when both countries allow cross-border use of collateral, banks will focus their holdings in the country with the lowest collateral costs. In addition, it is shown that liquidity risk will drop in both countries even with a decline in total collateral holdings.
- Subjects
COLLATERAL security; LIQUIDITY (Economics); CENTRAL banking industry; COMMERCIAL law; RISK
- Publication
Bank of England Quarterly Bulletin, 2006, Vol 46, Issue 1, p77
- ISSN
0005-5166
- Publication type
Article