in modern monetary and financial systems, namely central bank collateral frameworks. Their importance can be understood …, not defined in a market, but by the collateral frameworks and interest rate policies of central banks. Using the … collateral framework of the Eurosystem as a basis of illustration and case study, the paper brings to light the functioning …

collateral to support arbitrage trades. We show that with volatile asset demands, arbitrage becomes risky. With information … frictions, a looser collateral policy might render the economy more vulnerable to extremely large demand shocks, while a tighter … collateral constraint helps maintain the stability at the cost of market liquidity supply …

In this paper we examine the effect of collateral requirements on the prices of long-lived assets. We consider a Lucas …-style infinite-horizon exchange economy with heterogeneous agents and collateral constraints. There are two trees in the economy … which can be used as collateral for short-term loans. For the first tree the collateral requirement is determined …

general equilibrium in finite-horizon economy with heterogeneous agents and collateral constraints. There are two assets in … the economy which can be used as collateral for short-term loans. For the first asset the margin requirement is … presence of collateral constraints leads to strong excess volatility. Thus, a regulation of margin requirements may have …

banks. In a financial downturn, as the value of collateral decreases, the merchant bank must sell assets on short notice …

Central-bank collateral policy governs the convertibility of assets into central-bank money provided directly by the … yield curve through collateral policy …