Bloomberg the Company & Products

Bloomberg Anywhere Login

Bloomberg

Connecting decision makers to a dynamic network of information, people and ideas, Bloomberg quickly and accurately delivers business and financial information, news and insight around the world.

Company

Financial Products

Enterprise Products

Media

Customer Support

  • Americas

    +1 212 318 2000

  • Europe, Middle East, & Africa

    +44 20 7330 7500

  • Asia Pacific

    +65 6212 1000

Communications

Industry Products

Media Services

Follow Us

Constancio Says Must Monitor Rising Secured Money-Market Lending

Don't Miss Out —
Follow us on:

April 27 (Bloomberg) -- European Central Bank Vice President Vitor Constancio said policy makers are relying on new data to analyze the impact of increasing secured lending between financial institutions on the transmission of monetary policy.

“If the unsecured money market will continue to shrink and lose importance in relation to the secured money market activity, then the implementation framework of monetary policy will lose some traction,” Constancio told lawmakers in Brussels today. “We really are vitally interested in following detailed information on what’s going on” with regard to “the increase in secured lending in the money markets.”

A global initiative, coordinated by the Committee on the Global Financial System, to conduct a qualitative quarterly survey on credit terms and conditions in euro-denominated securities lending and OTC derivatives markets “will be of some help,” Constancio said. The ECB said yesterday that secured and unsecured money markets have become increasingly impaired as a result of the financial crisis.

Constancio also proposed the creation of a European-Union wide central database for repurchasing agreements, “similar to the model in the U.S.”

“The EU would be well placed for central data gathering for the repo markets,” Constancio said.

Repurchase agreements are contracts where one investor agrees to sell a security and then buy it back at a future date and a fixed price. The trades, known as repos, are one of several so-called shadow banking activities being targeted by the Group of 20 nations on concerns they may be used to evade a clampdown on excessive risk taking.

To contact the reporters on this story: Jennifer Ryan in London at jryan13@bloomberg.net; Jana Randow in Brussels at jrandow@bloomberg.net

To contact the editor responsible for this story: Craig Stirling at cstirling1@bloomberg.net

Please upgrade your Browser

Your browser is out-of-date. Please download one of these excellent browsers:

Chrome, Firefox, Safari, Opera or Internet Explorer.