Collateral transformation and HM Treasury: Difference between pages

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Collateral transformation is a key part of central banks' liquidity insurance role in financial markets.
''UK.''


(HMT).


Collateral transformation allows participating banks to temporarily exchange less liquid forms of collateral, for collateral which is more liquid.
His Majesty's Treasury.


For example, a participant might exchange corporate bonds, which are less liquid, for high-quality and highly liquid sovereign securities (gilts).
The UK government's economic and finance ministry.




Examples of collateral transformation facilities include the Bank of England's:
HM Treasury's responsibilities include overseeing the work of, and where appropriate providing financial guarantees in relation to:
*Discount Window Facility (DWF).
*The Bank of England
*Contingent Term Repo Facility (CTRF).
*The Debt Management Office  (DMO)
*His Majesty's Revenue & Customs  (HMRC)
*National Savings & Investments  (NS&I)
*UK Asset Resolution
*UK Government Investments Ltd (UKGI)




Collateral transformation is one type of 'liquidity upgrade'.
== See also ==
* [[Bank of England]]
* [[Debt Management Office]]  (DMO)
* [[His Majesty's Revenue & Customs]]  (HMRC)
* [[Joint Regulatory Oversight Committee]]  (JROC)
* [[Office of Financial Sanctions Implementation]]  (OFSI)
* [[Treasury]]
* [[UK Asset Resolution]] 
* [[United Kingdom Government Investments Ltd]]


The purpose is normally to enable a participating bank which uses the facility to go on to borrow in the private market, against the improved security of the temporarily 'upgraded' collateral.
[[Category:Accounting,_tax_and_regulation]]
 
 
The fees and other terms attached to the central bank's facilities are set at levels designed to ensure that participants use them as a back-stop to private market liquidity management, rather than using the central bank's facilities routinely.
 
 
==See also==
*[[Bank of England]]
*[[Central bank]]
*[[Collateral]]
*[[Contingent Term Repo Facility]]
*[[Discount Window Facility]]
*[[Gilts]]
*[[Indexed Long-Term Repo operations]]
*[[Liquidity]]
*[[Liquidity insurance]]
*[[Money market]]
*[[Operational Standing Facilities]]
*[[Repo]]
*[[Sterling Monetary Framework]]
*[[Stress]]
 
[[Category:The_business_context]]
[[Category:Financial_products_and_markets]]

Latest revision as of 12:50, 20 January 2024

UK.

(HMT).

His Majesty's Treasury.

The UK government's economic and finance ministry.


HM Treasury's responsibilities include overseeing the work of, and where appropriate providing financial guarantees in relation to:

  • The Bank of England
  • The Debt Management Office (DMO)
  • His Majesty's Revenue & Customs (HMRC)
  • National Savings & Investments (NS&I)
  • UK Asset Resolution
  • UK Government Investments Ltd (UKGI)


See also

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