Credit enhancement and Public money: Difference between pages

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1. ''Credit risk - securities''.
1. ''Economics - money supply - central banks.''


In the context of securities, credit enhancment is increasing the creditworthiness of securities.
The part of the money supply that is central bank liabilities.


Historically there were three main methods of credit enhancement in the private sector:
It includes physical money (banknotes and coins), demand deposits at the central bank and any domestic central bank digital currency.


#Junior/Senior tranches: The entire debt is divided into so-called junior and senior tranches, with the former bearing all the first losses.  Thus, the credit standing of the remaining senior tranches is raised considerably.
#Insurance: A third party, usually an insurance company, undertakes to insure the credit risk of the respective securities (called ‘wrapping’).
#Collateralisation: Securities may be backed by other financial assets, usually equity, of higher values.  The difference serves as collateral for the repayment of the debt (overcollateralisation). The issuing company may also put collateral on the differential between the respective security’s original value and its current market value (margin).


2.  ''Funding - public sector.''


The term 'credit enhancement' is now used in a much wider sense, to include additionally various forms of support provided by national governments, government-sponsored agencies and international agencies.
Funding for projects or activities sourced from the public sector.


 
Contrasted with ''private money.''
2. ''Credit risk management''.
 
Any form of credit risk reduction.
 
Also known as ''credit support''.




== See also ==
== See also ==
* [[Collateral]]
* [[Broad money]]
* [[Credit]]
* [[Central bank]]
* [[Credit risk]]
* [[Central bank digital currency]] (CBDC)
* [[Credit support]]
* [[Coin]]
* [[Encumbrance]]
* [[Digital public money]]
* [[Security]]
* [[Funding]]
* [[Tranche]]
* [[M0]]
* [[Unbacked]]
* [[M1]]
* [[Money]]
* [[Money supply]]
* [[Private money]]
* [[Public ]]
* [[Public private partnership]]
* [[Public sector]]


[[Category:Accounting,_tax_and_regulation]]
[[Category:Accounting,_tax_and_regulation]]
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[[Category:Investment]]
[[Category:Investment]]
[[Category:Long_term_funding]]
[[Category:Long_term_funding]]
[[Category:Financial_products_and_markets]]
[[Category:Trade_finance]]

Revision as of 08:55, 19 September 2022

1. Economics - money supply - central banks.

The part of the money supply that is central bank liabilities.

It includes physical money (banknotes and coins), demand deposits at the central bank and any domestic central bank digital currency.


2. Funding - public sector.

Funding for projects or activities sourced from the public sector.

Contrasted with private money.


See also

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