December 2020

What Drives U.S. Treasury Re-utilize?

Sebastian Infante and Zack Saravay

Abstract:

We explore what drives the re-utilize of U.S. Treasury securities sms lån på minuttetin the monetary machine. The utilization of confidential supervisory recordsdata, we estimate the extent of collateral re-utilize at the seller level through their collateral multiplier : the ratio between a vendor’s secured funding and their outright holdings. We get hold of that Treasury re-utilize will enhance as the present of on hand securities decreases, especially when present declines on account of Federal Reserve asset purchases. We also get hold of that non-U.S. sellers’ re-utilize will enhance when earnings from intersms lån på minuttetiating cash are high, U.S. sellers’ re-utilize will enhance when do a query to to supply on-the-trot Treasuries is high, and both forms of sellers’ re-utilize can alleviate stable asset shortage. In a roundabout device, we file a attractive tumble in Treasury re-utilize at the onset of the COVID-19 pandemic, sms lån på minuttet a subsequent reversal after the Federal Reserve’s intervention to toughen market functioning.

Keywords: re-utilize, repo, Treasury, collateral, rehypothecation

DOI: https://doi.org/10.17016/FEDS.2020.103

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Last Update:
December 18, 2020

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