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 …

bank's choice of collateral standards in its lending facilities. Optimism on the side of banks, entailing a higher … collateral value of bank loans, can lead to excessive lending and bank default. Pessimism, though, can entail insufficient … lending and productivity losses. With an appropriate haircut on collateral, the central bank can perfectly neutralize the …

fundamental risk. This effect is separate from the liquidation externality caused by fire sales of seized collateral upon default …

central bank collateral framework and regulation determine jointly the ability of the banking system to deliver maturity … bank collateral and why a sudden non-anticipated reduction of asset liquidity, or a tightening of the collateral framework …, can destabilize short term liabilities of banks. Finally, the model allows discussing how the collateral framework can be …

their regulatory ratio by altering their collateral pledging with the European Central Bank. We use the existence of … assets. Using security-level information on collateral pledged with the central bank, we find that banks without a preceding … national liquidity requirement pledge more and less liquid collateral than banks with a preceding national liquidity …

-like in quiet times but become illiquid when uncertainty spikes. Shadow banking economizes on scarce collateral, expanding …-banking spreads, forcing the financial sector to switch to collateral-intensive funding. Shadow banking collapses, liquidity provision … recoveries, collateral runs, and flight-to-quality. It sheds light on LSAPs, Operation Twist, and other interventions …

We investigate how counterparties' characteristics, and the collateral they use, interact with their demand for … facilities to meet their liquidity needs. Collateral assets used for FLS are less liquid, since almost all assets are loan … portfolios. Riskier and larger institutions are more likely to pre-position collateral in the FLS, but these counterparties do …

studying an extensive dataset of banks' liquidity uptake and pledged collateral in central bank repos. We document systemic … arbitrage whereby banks funnel credit risk and low-quality collateral to the central bank. Weaker banks use lower quality … collateral to demand disproportionately larger amounts of central bank money (liquidity). This holds both before and after the …