The Changing Collateral Space

By: Manmohan Singh

Collateral does not travel in a vacuum; it needs (on- or off-) balance sheet space to flow through the financial system. This chapter provides a snapshot of the changing collateral space and how it may shape the global demand supply for collateral. We first identify the key collateral pools (relative to the old collateral space that existed during pre-Lehman days). However, post-Lehman, official sector efforts via quantitative easing (QE) are significantly altering the collateral space. More