Collateral Framework: Liquidity Premia and Multiple Equilibria
Yvan Lengwiler and Athanasios Orphanides (forthcoming). Journal of Money, Credit, and Banking. Central banks normally accept debt of their own governments as collateral in liquidity operations without reservations. This gives rise to a valuable liquidity premium that reduces the cost of government finance. The ECB is an interesting exception in… Read More »Collateral Framework: Liquidity Premia and Multiple Equilibria