counterparties (CCPs) would require large increases in posted collateral, possibly requiring large banks to raise more capital. These … appropriate capital levy on remaining positions to encourage the transition. …

-term oriented, with high implicit capital, and low risk (thanks to the law of large numbers). Trading is transactions …-based: scalable, shortterm, capital constrained, and with the ability to generate risk from concentrated positions. When a bank … engages in trading, it can use its ‘spare’ capital to profitablity expand the scale of trading. However, there are two …

policy spillovers. Concerns that the end of QE2 could lead to a rapid reversal of emerging market capital flows appear …