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This is news to me. What happens if the banks don't meet their collateral requirements? A fine? Secondly, I assume this will cause interest rates to go up as a

by et-al 10y ago

This is news to me. What happens if the banks don't meet their collateral requirements? A fine? Secondly, I assume this will cause interest rates to go up as a way for banks to incentivise people to save money?

ChuckMcM 10y ago
I was wondering if they would approach companies like Apple with a lot of off shore cash.
- lucozade 10y ago
  Wouldn't at all surprise me if Apple's treasury department already lend out to banks.
  - Dwolb 10y ago
    Apple have their own hedge fund to help manage their assets [1]. [1] https://en.wikipedia.org/wiki/Braeburn_Capital https://en.wikipedia.org/wiki/Braeburn_Capital
lucozade 10y ago
> What happens if the banks don't meet their collateral requirements? That's equivalent to a default on the contract. It'll end up in a legal settlement whereby the currently posted collateral, if any, will be used in the settlement. The general idea with collateral is to ensure that, if one or other counterparty defaults, the net loss for the non-defaulter is kept relatively small. BTW the regulation change that this article refers to is really just a change in how certain collateral balances are calculated. It's a pain for the banks as there are lots of regulators who don't really agree and keep changing their minds. Also, you now have to "show your working" more or you get hit with a punitive charge. It's not conceptually hard but requires a lot of coordination both inside the banks and between the banks and regulators.