With the European debt crisis, the role of assets accepted by the Eurosystem as collateral for refinancing operations … bond prices led to significant fluctuations in the collateral constraints of credit institutions. This paper documents the … the decline in asset prices during the European debt crisis on the valuation of collateral available for refinancing. We …

collateral to support arbitrage trades. We show that with volatile asset demands, arbitrage becomes risky. With information … frictions, a looser collateral policy might render the economy more vulnerable to extremely large demand shocks, while a tighter … collateral constraint helps maintain the stability at the cost of market liquidity supply …

their collateral supply is determined by their ex ante securities holdings and repo rates. Second, it makes use of the …

their collateral supply is determined by their ex ante securities holdings and repo rates. Second, it makes use of the …