reluctance to clear derivative trades in the absence of a central clearing obligation. We develop a comprehensive understanding … moving from a bilateral to a clearing architecture for derivative markets. Previous studies suggest that central clearing is … beneficial for single market participants in the presence of a sufficiently large number of clearing members. We show that three …

This paper studies the optimal clearing arrangement for bilateral financial contracts in which an assessment of …, at a cost, about the commitment of their borrowers, which affects the assessment of counterparty risk. Clearing through a … and reveal information. If information acquisition is incentive‐compatible, then lenders choose central clearing. If it is …

Bilateral financial contracts typically require an assessment of counterparty risk. Central clearing of these financial … and to reveal information about such risk. When considering this trade-off, participants would choose central clearing if … information acquisition is incentive compatible. If it is not, they may prefer bilateral clearing, when this choice prevents …

such risk? When counterparty risk is not observable, I show that central clearing leads to higher collateral requirements …Can central counterparty (CCP) clearing control counterparty risk in the presence of risk taking that can aggravate … forgo incentives for transactions that use collateral only for insurance. With collusion about risk taking, a CCP needs to …

reluctance to clear derivative trades in the absence of a central clearing obligation. We develop a comprehensive understanding … moving from a bilateral to a clearing architecture for derivative markets. Previous studies suggest that central clearing is … beneficial for single market participants in the presence of a sufficiently large number of clearing members. We show that three …

defaulting member. We consider schemes that use a collateral pool calculated using a rolling time window. Our simulations show … that the size of the window has a very significant effect on the average level of collateral and its variability day to day …, creating an interesting trade-off. Collateral levels and variability may be important for ACSS participants because they could …

interconnected clearing members are associated with higher margin holdings. While margin requirements increased significantly around …

interconnected clearing members are associated with higher margin holdings. While margin requirements increased significantly around …

stablecoin. DAI works through a set of autonomous smart contracts, in which users deposit cryptocurrency collateral, typically …, we show that DAI price covaries negatively with returns to risky collateral. The peg-price volatility is related to … collateral risk, while the stability rate has little ability to stabilize the coin. The introduction of safe collateral types has …