… seem to be on the increase.
This post by Marc Rubinstein offers a short but detailed summary of what has been going on, why and what it means for markets. Read the whole post but one of the key issues for me is increased procyclicality…
The drawback of a heavily collateralized market, though, is its tendency to inject procyclicality into the system. Periods of market turbulence can drive sharply higher collateral requirements, which can prompt more turbulence if that leads to forced selling – such as we saw in the UK last week.Marc Rubinstein, “Net Interest” Blog – 8 October 2022
Tony – From the Outside