Skip to main content

Newsroom

November 12, 2013

Fed's Liquidity Plan Could Spur Collateral Shortfall

Top Federal Reserve Board officials are cautiously eyeing the possibility that a new liquidity proposal may incite a collateral shortfall just as the central bank starts to unwind its easy-money policies.

It is not a near-term problem as the central bank continues to push off changing course on its $85 billion monthly bond buying program, but Fed officials are weighing the negative ramifications of forcing banks to meet a slew of new regulatory rules and how such requirements will interact with its monetary policy decision-making in the future.

Specifically, Fed officials are worried about possible unintended consequences that may result when the central bank begins to unwind its balance sheet, ultimately causing the $2.4 trillion held in reserves to shrink back to its precrisis levels. That could potentially spark a shortfall of high-quality assets available to U.S. institutions to meet a proposed liquidity requirement that goes into effect in 2015.”

***

Read full American Banker article here

In the News
Share

MEDIA REQUESTS

For media inquiries, please contact us at
press@bettermarkets.org or 202-618-6433.

Contact Us

For media inquiries, please contact press@bettermarkets.org or 202-618-6433.

To sign up for our email newsletter, please visit this page.

Name(Required)
This field is for validation purposes and should be left unchanged.

Sign Up — Stay Informed With Our Monthly Newsletter

This field is for validation purposes and should be left unchanged.

For media inquiries,

please contact press@bettermarkets.org or 202-618-6433.

Donate

Help us fight for the public interest in our financial markets, protecting Main Street from Wall Street and avoiding another costly financial collapse and economic crisis, by making a donation today.

Donate Today