At the height of the European sovereign debt crisis, the European Central Bank decided to purchase distressed European government bonds. Even worse, and more importantly, the ECB is providing direct support of several hundred billions of euros to troubled banks via its normal monetary policy...

Over the last twenty years, the process of European integration, and improvements in the processing and transmission of information, have meant that the European financial system has become less bank-based and more market-based. This trend has been reinforced by the transition to a single...

Collateral plays a central role in monetary policy. In recent years, its importance has increased as uncollateralised inter-bank borrowing has gradually been replaced by collateralised central bank lending. This has in turn affected collateral availability and the need for high-quality assets....