Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/245528 
Year of Publication: 
2021
Series/Report no.: 
Deutsche Bundesbank Discussion Paper No. 39/2021
Publisher: 
Deutsche Bundesbank, Frankfurt a. M.
Abstract: 
The reuse of collateral can support the efficient allocation of assets in the financial system. Exploiting a novel dataset, we quantify banks' collateral reuse at the security level. We show that banks substantially increase their reuse of collateral in response to scarcity induced by central bank asset purchases. Repo rates are less sensitive to purchase-induced scarcity at low levels of reuse, when the banking system can easily supply collateral through reuse. Repo rates are more sensitive to scarcity and more volatile at high levels of reuse, highlighting the trade-off between the shock absorption and shock amplification effects of collateral reuse.
Subjects: 
safe assets
government bonds
collateral reuse
rehypothecation
repo market
securities lending
JEL: 
E4
E5
G1
G2
ISBN: 
978-3-95729-847-8
Document Type: 
Working Paper

Files in This Item:
File
Size





Items in EconStor are protected by copyright, with all rights reserved, unless otherwise indicated.