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Central Bank Collateral Frameworks; Principles and Policies

Author

Listed:
  • Rebecca McCaughrin
  • Simon T Gray
  • Alexandre Chailloux

Abstract

Central bank collateral policies came under pressure with the 2007-08 financial market crisis. This paper addresses the rationale for and constraints in taking collateral, and recent practices in different collateral frameworks. It then considers the risks of adverse selection. The paper concludes that (i) the collateral framework needs to include market incentives; (ii) central banks face trade-offs between risk and counterparty access; (iii) emerging markets may see pressure on collateral policies in coming years; and (iv) further work is required to develop pricing incentives and the structure of central bank facilities, both during normal times and in periods of market stress.

Suggested Citation

  • Rebecca McCaughrin & Simon T Gray & Alexandre Chailloux, 2008. "Central Bank Collateral Frameworks; Principles and Policies," IMF Working Papers 08/222, International Monetary Fund.
  • Handle: RePEc:imf:imfwpa:08/222
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    Cited by:

    1. Nyborg, Kjell G., 2017. "Central bank collateral frameworks," Journal of Banking & Finance, Elsevier, vol. 76(C), pages 198-214.
    2. repec:eee:jbfina:v:83:y:2017:i:c:p:232-248 is not listed on IDEAS
    3. Poutineau, Jean-Christophe & Vermandel, Gauthier, 2015. "Cross-border banking flows spillovers in the Eurozone: Evidence from an estimated DSGE model," Journal of Economic Dynamics and Control, Elsevier, vol. 51(C), pages 378-403.
    4. Hans-Werner Sinn & Timo Wollmershäuser, 2012. "Target loans, current account balances and capital flows: the ECB’s rescue facility," International Tax and Public Finance, Springer;International Institute of Public Finance, vol. 19(4), pages 468-508, August.
    5. Karagiannis, Stelios & Panagopoulos, Yannis & Vlamis, Prodromos, 2010. "Interest rate pass-through in Europe and the US: Monetary policy after the financial crisis," Journal of Policy Modeling, Elsevier, vol. 32(3), pages 323-338, May.
    6. Peter Stella, 2009. "The Federal Reserve System Balance Sheet; What Happened and Why it Matters," IMF Working Papers 09/120, International Monetary Fund.
    7. Roland Döhrn & György Barabas & Heinz Gebhardt & Tobias Kitlinksi & Martin Micheli & Simeon Vosen & Lina Zwick, 2013. "Die wirtschaftliche Entwicklung im Inland: Binnennachfrage trägt Aufschwung," RWI Konjunkturbericht, Rheinisch-Westfälisches Institut für Wirtschaftsforschung, pages 64, 09.
    8. Bignon, V. & Boissay, F. & Cahn, C. & Harpedanne De Belleville, L-M, 2016. "Les créances privées davantage éligibles au refinancement de l’Eurosystème Conséquences sur l’offre de crédit," Bulletin de la Banque de France, Banque de France, issue 206, pages 19-28.
    9. Döhrn, Roland & an de Meulen, Philipp & Barabas, György & Gebhardt, Heinz & Kitlinski, Tobias & Micheli, Martin & Schmidt, Torsten & Vosen, Simeon & Zimmermann, Lina, 2012. "Die wirtschaftliche Entwicklung im Inland: Konjunktur wieder im Aufwind," RWI Konjunkturberichte, RWI - Leibniz-Institut für Wirtschaftsforschung, vol. 63(1), pages 43-99.
    10. Döhrn, Roland & Barabas, György & Gebhardt, Heinz & Kitlinski, Tobias & Micheli, Martin & Vosen, Simeon & Zwick, Lina, 2013. "Die wirtschaftliche Entwicklung im Inland: Binnennachfrage trägt Aufschwung," RWI Konjunkturberichte, RWI - Leibniz-Institut für Wirtschaftsforschung, vol. 64(3), pages 41-103.
    11. Maria J. Nieto & Gillian G. Garcia, 2012. "The insufficiency of traditional safety nets: what bank resolution fund for Europe?," Journal of Financial Regulation and Compliance, Emerald Group Publishing, vol. 20(2), pages 116-146, May.
    12. Roland Döhrn & Philipp an de Meulen & György Barabas & Heinz Gebhardt & Tobias Kitlinski & Martin Micheli & Torsten Schmidt & Simeon Vosen & Lina Zimmermann, 2012. "Die wirtschaftliche Entwicklung im Inland zur Jahreswende 2011/2012 - Konjunktur wieder im Aufwind," RWI Konjunkturbericht, Rheinisch-Westfälisches Institut für Wirtschaftsforschung, pages 58, 03.
    13. repec:wsi:jicepx:v:04:y:2013:i:02:n:s1793993313500117 is not listed on IDEAS
    14. Bednarik, Radek, 2008. "Analýza volatility devizových kurzů vybraných ekonomik
      [The Analysis of Volatility of Selected Countries' Exchange Rates]
      ," MPRA Paper 15046, University Library of Munich, Germany.
    15. de Roure, Calebe, 2016. "Fire buys of central bank collateral assets," Discussion Papers 51/2016, Deutsche Bundesbank.
    16. Hans-Werner Sinn & Timo Wollmershäuser, 2012. "Target Balances and the German Financial Account in Light of the European Balance-of-Payments Crisis," CESifo Working Paper Series 4051, CESifo Group Munich.

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