The velocity of collateral

From a new paper (pdf) by M. Singh:

Using hand collected data, this paper shows that, post-Lehman, two effects have occurred: overall collateral availability has declined, and the intermediation chains have become much shorter.

The paper argues that a decline in the velocity of collateral is similar in some ways to a decline in the velocity of money.  Here is a related article (FT$).  These are not fun or easily digestible pieces, but they are good background reading for a deeper understanding of how money markets have changed and why there is still some risk they might break down.


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