Puts in the Shadow

Author/Editor:

Manmohan Singh

Publication Date:

September 1, 2012

Electronic Access:

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Disclaimer: This Working Paper should not be reported as representing the views of the IMF.The views expressed in this Working Paper are those of the author(s) and do not necessarily represent those of the IMF or IMF policy. Working Papers describe research in progress by the author(s) and are published to elicit comments and to further debate

Summary:

In the aftermath of the Lehman crisis, payouts (i.e., taxpayer bailouts) in various forms were provided by governments to a variety of financial institutions and markets that were outside the regulatory perimeter - the "shadow" banking system. Although recent regulatory proposals attempt to reduce these "puts", we provide examples from non-banking activities within a bank, money market funds, Triparty repo, OTC derivatives market, collateral with central banks, and issuance of floating rate notes etc., that these risks remain. We suggest that a regulatory environment where puts are not ambiguous will likely lower the cost of bail-outs after a crisis.

Series:

Working Paper No. 12/229

Subject:

English

Publication Date:

September 1, 2012

ISBN/ISSN:

9781475510560/1018-5941

Stock No:

WPIEA2012229

Price:

$18.00 (Academic Rate:$18.00)

Format:

Paper

Pages:

21

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