We examine how the repo market operates during liquidity stress by applying network analysis to novel transaction …-level data of the overnight gilt repo market including the COVID-19 crisis. During this crisis, the repo network becomes more … the repo volumes and spreads during the stress relative to normal times. We find a significant increase in volumes traded …

Does demand for safety create instability ? Secured (repo) funding can be made so safe that it never runs, but shifts … fundamental risk. This effect is separate from the liquidation externality caused by fire sales of seized collateral upon default …. While secured funding combined with high yield unsecured debt may reduce instability, the private choice of repo funding …