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SUMMARY:Central Bank Collateral Frameworks - Professor Kjell G. Nyborg\, a
  native of Norway\, currently holds the Chair in Corporate Finance at the 
 Department of Banking and Finance at the University of Zurich
DTSTART:20160121T130000Z
DTEND:20160121T140000Z
UID:TALK61139@talks.cam.ac.uk
CONTACT:Cerf Admin
DESCRIPTION:This paper seeks to inform about a feature of monetary policy 
 that is largely overlooked\, yet occupies a central role in modern monetar
 y and financial systems\, namely central bank collateral frameworks. Their
  importance can be understood by the observation that the money at the cor
 e of these systems\, central bank money\, is injected into the economy on 
 terms\, not defined in a market\, but by the collateral frameworks and int
 erest rate policies of central banks. Using the collateral framework of th
 e Eurosystem as a basis of illustration and case study\, the paper brings 
 to light the functioning\, reach\, and impact of collateral frameworks. A 
 theme that emerges is that collateral frameworks may have distortive effec
 ts on financial markets and the wider economy. They can\, for example\, bi
 as the private provision of real liquidity and thereby also the allocation
  of resources in the economy as well as contribute to financial instabilit
 y. Evidence is presented that the collateral framework in the euro area pr
 omotes risky and illiquid collateral and\, more generally\, impairs market
  forces and discipline. The paper also emphasizes the important role of ra
 tings and government guarantees in the Eurosystem’s collateral framework
 .
LOCATION:Room W4.05 Judge Business School
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