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A supplementary note on the systemic importance of collateral and the role of the repo market

A new supplementary paper from the ICMA’s European Repo Council, written by Richard Comotto, explains the importance of collateral to the stability and efficiency of the financial system. The paper highlights how the proposed Financial Transaction Tax (FTT) would impact the movement of collateral, posing significant systemic risks and interrupting the flow of money between banks, to governments and to the real economy.

The supplementary note follows on from an earlier paper titled Collateral damage: the impact of the Financial Tax on the European repo market and its consequences for the financial markets and the real economy. Richard Comotto, Senior Visiting fellow at the ICMA Centre, will be speaking in more detail at the upcoming conference organised by the ICMA European Repo Council, titled “A collateralised future - what really happened in the repo market during the crisis and how will it cope with growing collateral demand, stagnant supply and regulatory uncertainty?” on 11 June 2013.

You can find out more information about the conference here.

Published 10 May 2013

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