, Columnist
What Is Really to Blame for the Repo Market Blowup
BIS has missed the point. The real problem is the regulatory demand that means four banks hold so many U.S. Treasuries.
Reaping the wind.
Photographer: BRYAN R. SMITH/AFPThis article is for subscribers only.
The Bank for International Settlements — the central bank of central banks — has weighed in with its analysis of what went wrong in mid-September when the U.S. repurchase market all of a sudden dried up (for the first time in a decade). It looks like it has missed the point.
While pointing the finger at a raft of different reasons and players, notably hedge funds, BIS doesn’t really answer the salient questions: Why haven’t the elevated funding rates that arose in September gone away and what can be done to prevent something like the original event from happening again?