Central Bank Collateral Frameworks

Central bank collateral policies came under pressure with the 2007-08 financial market crisis. This paper addresses the rationale for and constraints in taking collateral, and recent practices in different collateral frameworks. It then considers the risks of adverse selection. The paper concludes that (i) the collateral framework needs to include market incentives; (ii) central banks face trade-offs between risk and counterparty access; (iii) emerging markets may see pressure on collateral policies in coming years; and (iv) further work is required to develop pricing incentives and the structure of central bank facilities, both during normal times and in periods of market stress.Central bank policy;Risk management;Emerging markets;Price incentives;Liquidity;Capital flows;collateral, credit, repo, pricing, counterparty, prices, payment systems, checks, reserve requirements, refinancing, pools, rtgs, bills of exchange, payment system, purchases, registration, credit cards, secured lending, reverse repo, cash payments, confirmation, cash flows, custody, counterpart, payments, current account, ratings of banks

Can You Map Global Financial Stability?

The Global Financial Stability Map was developed as a tool to interpret the risks and conditions that impact financial stability in a graphical manner. It complements other existing tools for assessing financial stability, and seeks to overcome some of the drawbacks of earlier approaches. This paper provides the motivation for the tool, a detailed discussion of its construction, including the choice of risk factors and conditions, a description of the underlying indicators, and a discussion on how the final assessment is determined. When applied to past events of financial instability, the Global Financial Stability Map performs reasonably well in signaling risks to stability, as well as in characterizing the depth of crisis episodes.Financial stability;Enhanced surveillance;Global Financial Stability Report;Financial risk;Credit risk;inflation, bond, financial system, financial markets, hedge, financial institutions, hedge fund, bonds, financial market, stock market, financial instability, stock market crash, bond index, futures markets, real interest rates, financial sector, hedge funds, corporate bond, monetary policy, market bond, currency crises, futures contracts, corporate bond index, equity markets, hedge fund returns, foreign exchange, bond funds, dividend discount model, real rates, international financial statistics, futures trading, emerging market bond, commodity futures, treasury bond, high inflation, stock index, domestic bonds, corporate bonds, stock indices, global bond market, global bond, hedge fund return, effective exchange rates, stock markets, financial economics, macroeconomic stability, high yield bonds, stock price volatility, government bonds, international reserves, stock price, inflation rate, currency futures, inflation performance, financial fragility, financial policies, hedging, treasury bond yields, bond yields, money supply, stock prices, financial assets, bond market, asset markets, hedge fund index, commodities futures, high-yield bonds, money growth, bond markets, inflation rates