Conventional collateral requirements are highly conservative but are not explicitly designed to deal with systemic risk …. This paper explores the adequacy of conventional collateral levels against systemic risk in the Canadian futures market … during the 2008 crisis. Our results show that conventional collateral levels adequately absorb crisis-level systemic risk …

externalities induced by a collateral constraint. Limiting the loan-to-value ratio benefits only few unconstrained borrowers and … reduces ex-ante social welfare. A Pigouvianstyle symmetric debt tax (that subsidizes savings) raises collateral prices and … social welfare. Overall, collateral effects are of minor importance and interest rate rather than asset price responses are …

theoretically not possible without securities lending. If, at the same time, no derivatives are traded on the market as a substitute …