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Under what circumstances does the ECB's role as lender of last resort for a clearinghouse provide value? Would not having to provide that service for these cle
by breatheoften 10y ago
Under what circumstances does the ECB's role as lender of last resort for a clearinghouse provide value? Would not having to provide that service for these clearinghouses be a good thing if it obligates (or effectively forces) the Bank of England to serve in that capacity instead?
- krona 10y agoUnder what circumstances does the ECB's role as lender of last resort for a clearinghouse provide value? A Euro liquidity crisis. Would not having to provide that service for these clearinghouses be a good thing if it obligates (or effectively forces) the Bank of England to serve in that capacity instead? Um, the BoE doesn't do Euros. By converting such derivatives to GBP, it would exacerbate a Euro liquidity crisis.
- breatheoften 10y agoWhat happens to the clearinghouses if there's a euro liquidity crisis and the ecb doesn't lend clearinghouses the needed euros? Couldn't the Bank of England keep sufficient euro reserves to backstop the clearinghouses in a liquidity crisis?