tag:blogger.com,1999:blog-5908830827135060852.post6401509255138086452..comments2024-03-01T02:40:14.946-05:00Comments on Bond Economics: Initial Comments On Sissoko Paper: Money MarketsBrian Romanchukhttp://www.blogger.com/profile/02699198289421951151noreply@blogger.comBlogger4125tag:blogger.com,1999:blog-5908830827135060852.post-28116914770704560192022-10-19T07:17:44.088-04:002022-10-19T07:17:44.088-04:00Yes - it is lending against private sector assets,...Yes - it is lending against private sector assets, which defeats the Sissoko’s objective of insulating the central bank from private sector credit losses. (This is Brian, my tablet is giving me login grief for comments.)Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-5908830827135060852.post-33698597654534940572022-10-18T13:11:33.007-04:002022-10-18T13:11:33.007-04:00"On paper, the central bank could just provid..."On paper, the central bank could just provide banks with settlement balances. There are two problems with that option: banks would be forced to hold low-yielding settlement balances which then forces loan spreads wider, and the amount of government liabilities in existence is determined by fiscal policy. If fiscal policy does not provide a large enough liability pool to allow adequate liquidity management, the central bank would need to “monetise” private sector assets, which is a form of fiscal policy that exposes the central government to losses."<br /><br />Why not just encourage discount window lending? The CB will provide reserves on demand via short term loans in exchange for good collateral. Or do you consider this monetisation of private sector assets somehow?Charlienoreply@blogger.comtag:blogger.com,1999:blog-5908830827135060852.post-89891851602188485822022-10-13T19:07:14.299-04:002022-10-13T19:07:14.299-04:00I mangled it in editing, thanks.I mangled it in editing, thanks.Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-5908830827135060852.post-67728241822892565562022-10-13T14:15:35.206-04:002022-10-13T14:15:35.206-04:00"Banks do want to spend their time to competi..."Banks do want to spend their time to competing banks, nor would a halfway competent bank want to depend upon getting financing from its competitors on demand."<br /><br />Seems something got left out of this sentence?Anonymousnoreply@blogger.com