Emerging Market Securities Access to Global Plumbing

Author/Editor:

Gongpil Choi ; Federico Ortega ; Manmohan Singh

Publication Date:

March 26, 2021

Electronic Access:

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Disclaimer: IMF Working Papers describe research in progress by the author(s) and are published to elicit comments and to encourage debate. The views expressed in IMF Working Papers are those of the author(s) and do not necessarily represent the views of the IMF, its Executive Board, or IMF management.

Summary:

What are the constraints that have stalled EMs efforts to reuse their securities in international financial centers? We discuss the economics of collateral re-use and the present institutional structure in Asian and Latin American countries. Our empirical investigation suggests pledgeability enhances financial stability and reduces dollar funding risk. We also explain the Eurozone collateral pool to incentivize EMs, and why many securities (e.g., BTPs, Italy) are acceptable in London but not EM securities. Looking forward, EMs liaison with International Central Securities Depositories (ICSDs), and global banks’ balance sheet capacity to intermediate cross-border collateral will be crucial for this market to develop.

Series:

Working Paper No. 2021/094

Frequency:

regular

English

Publication Date:

March 26, 2021

ISBN/ISSN:

9781513574165/1018-5941

Stock No:

WPIEA2021094

Pages:

37

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