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Using survey data on secured funding arrangements provided by broker–dealers for their clients—a class of contracts that includes bilateral repo—we document that financing rates, collateral haircuts, lending maturities, and position limits move strongly together over time and across asset classes. Liquidity of the underlying securities, as opposed to their volatility or credit risk, is the main driver of this behavior, with dealer balance-sheet constraints also playing a role in the funding of less-liquid security types. A simple model of dealer–client interaction rationalizes these findings. Instrumenting with changes in market conventions, we find that funding conditions had little effect on cash securities markets between 2011 and 2019, but the tightening of terms during the market stress of early 2020 likely impaired liquidity and reduced asset returns to some degree. [ABSTRACT FROM AUTHOR]

Three hypotheses arise concerning negatives impacts of central bank's repo balance on monetary policy: (i) short maturity and payments close to policy rate for repos cause a decrease in average maturity of public debt; (ii) repo balance expansions weaken the wealth channel of monetary policy; (iii) agents' expectations regarding repo expansions undermine other monetary policy instruments. This work seeks to verify the existence of evidence to support these hypotheses, resorting to VAR and impulse-response functions analysis. Evidence is found for a negative effect of repo on public debt's duration, but not for the other two hypotheses. These suggests an additional cost of resorting to repos for monetary policy execution, albeit smaller than other authors have supposed. [ABSTRACT FROM AUTHOR]

Borrowers obtain liquidity by issuing securities backed by the current period payoff and resale price of a long-lived collateral asset, and they are privately informed about the payoff distribution. Asset price can be self-fulfilling: a higher asset price lowers adverse selection and allows borrowers to raise greater funding, which makes the asset more valuable, leading to multiple equilibria. Optimal security design eliminates multiple equilibria, improves welfare, and can be implemented as a repo contract. Persistent adverse selection lowers debt funding, generates volatility in asset prices, and exacerbates credit crunches. The theory demonstrates the role of asset-backed securities on stability of market-based financial systems. [ABSTRACT FROM AUTHOR]

This paper describes the part played by repo trading, collateral management and liability driven investment (LDI) strategies (each of which was designed to improve the management of risk) in amplifying the crash in gilt prices following the 23rd September, 2022 UK mini-budget. This was a crisis that ultimately led to the resignations of the British Prime Minister and Chancellor of Exchequer as well as the announcement by the Bank of England of a willingness to spend up to £65bn intervening in the gilt market.1 It argues that neither the government nor the LDI funds were solely responsible for the crash and that the fragilities in the UK financial system had gradually built up over a number of decades. It also looks at the lessons that could potentially be learned by financial institutions using repo trading or collateral management as well as the potential lessons for policy makers in government and regulatory bodies. [ABSTRACT FROM AUTHOR]

Copyright of Revista del ICDT is the property of Instituto Colombiano de Derecho Tributario and its content may not be copied or emailed to multiple sites or posted to a listserv without the copyright holder's express written permission. However, users may print, download, or email articles for individual use. This abstract may be abridged. No warranty is given about the accuracy of the copy. Users should refer to the original published version of the material for the full abstract. (Copyright applies to all Abstracts.)

With an emphasis on contributing to macroeconomic pedagogy, we examine the collateral multiplier by comparing it to the traditional money multiplier in a simplified framework of traditional banking and shadow banking in which government bonds are the core assets. While the money multiplier is a measure of the ability of the banking system to intermediate sovereign debt by creating deposits, the collateral multiplier is a measure of the shadow banking system's ability to intermediate sovereign debt by creating shadow money. It also measures the degree of reuse of sovereign debt as collateral. In this setup, the collateral multiplier is defined as the ratio between dealer banks' matched book repo activity relative to their trading book. Using the New York Fed's Primary Dealer Statistics data, we empirically estimate the collateral multiplier for US Treasury repo collateral. Our model and empirical results shed light on the transmission mechanisms of monetary policy channeled through shadow banks and on the US Treasuries market turmoil induced by COVID-19 in March 2020. [ABSTRACT FROM AUTHOR]

The growth of regulatory require ments has drastically increased the magnitude of collateral consumption for buy-side market participants in recent years. This has forced companies to rethink their strategies surrounding collateral consumption, trading and collateral yield strategies. With a specific focus on pension and insurance companies, this paper discusses some of the challenges that these institutions are facing and makes action able recommendations towards collateral optimisation practices. Further, it provides guidance towards prudent liquidity management and raises essential elements for collateral-driven revenuegeneration. [ABSTRACT FROM AUTHOR]

The article examines emerging financial capitalism in Russia and its recent developments, the rise of collateralised finance and trading in repo markets. The main conclusion is that a combination of sophisticated speculative practices with a strong state presence in financial markets is a distinctive feature of Russia after 2008. The decoupling of the financial system from the credit supply to the real sector is still continuing after the collapse of Communism. The role of the capital markets is restricted to short-term liquidity management in money markets, which rose after 2011 due to an increased provision of state liquidity. The existence of a large monetary overhang accumulated within the Russian banking system and its interconnectedness with collateralised markets are discussed. The development stages of the repo markets and the main collateral types are considered in relation to the expansion of the state liquidity supply. This study provides an additional perspective within the ongoing debate on contemporary state capitalism in emerging markets. [ABSTRACT FROM AUTHOR]

Modern, globalised financial markets are the offspring of a process of liberalisation of capital that started with the collapse of Bretton Woods in the 1970s and culminated with a number of regulatory changes in the 1980s and 1990s. As a consequence of that process, financial markets have grown dramatically and become increasingly integrated at a global level. Importantly, the growth and innovation that occurred over the past decade has taken place in the realm of capital market finance, and in particular in the context of market-based channels that revolved chiefly around securitisation and repo transactions. As a result, new debt transactions and products have been engineered since the 1980s. This article contends that, contrary to conventional belief, the excessive development of market-based channels of finance has been one of the catalysts behind the crises and scandals exploded over the past fifteen years. In particular, the employment of innovative debt transactions was instrumental to the creation of excessive levels of risk-taking and leverage. These had catastrophic consequence, both at firm level and at systemic level. Notwithstanding the regulatory measures that have been enacted over the past fifteen years, the way in which debt transactions in capital markets are designed and entered into remains lightly or indirectly regulated. Moreover, regulators have so far neglected the role that leverage and debt creation have in the economy and the consequence that these phenomena have on the wider social context. On the contrary, recently the EU has promoted the implementation of an old design, namely the Capital Markets Union (CMU). This revolves around market-based forms of financing, which should represent an alternative to the traditionally predominant (in Europe) bank-based financing channels. This article contends that the CMU framework fails to appreciate the dangers associated with capital markets finance and its ensuing debt creation effects. It argues that, despite some regulatory efforts, a suitable architecture for the regulation of market-based channels of finance is still missing. [ABSTRACT FROM AUTHOR]

The study of sources, ways, methods and instruments of bank resource formation allows to carry out active operations of the bank according to the origin of resources. Therefore, in this article, bank resources' mechanisms of money and capital market formation are studied. The characteristics of money market and capital market instruments were used for the analysis. The analysis also lists the liabilities and capital structure of Uzbek banks in 2016-2020. According to the analysis, the formation of banking resources in Uzbekistan is based on the need for the effective use of money market instruments and the development of capital markets in this regard. Situational and structural methods were used in the analysis. [ABSTRACT FROM AUTHOR]

Copyright of Tasavvur: Tekirdag Theology Journal / Tekirdag Ilahiyat Dergisi is the property of Namik Kemal University, Faculty of Theology and its content may not be copied or emailed to multiple sites or posted to a listserv without the copyright holder's express written permission. However, users may print, download, or email articles for individual use. This abstract may be abridged. No warranty is given about the accuracy of the copy. Users should refer to the original published version of the material for the full abstract. (Copyright applies to all Abstracts.)

Money markets are at the heart of financialized capitalism, as those markets that provide the funding liquidity needed for credit creation and leveraged trading. How have these markets evolved, grown, and become critical for larger financial flows? To answer this question, I distinguish an early period of financial globalization marked by regulatory arbitrage, offshoring, deregulation, and informal trading practices from a period of regime-consolidation marked by formal institutionalization. Concentrating on repo markets as the key funding sources for market-based banking, I demonstrate that new institutional arrangements for these markets were initiated by private sector associations, but supported and authorized by public authorities. Bond trader groups codified new contractual arrangements and these were validated via reforms of bankruptcy codes and changes in central banks' policy frameworks in the United States and European Union. Through these modifications and re-articulations in institutional conditions, transactions and large exposures on money markets became routine affairs—for shadow banking actors like money market funds as well as for commercial banks. The article concludes by discussing the continuity of regime-consolidation efforts after the transatlantic financial crisis and hypothesizes that they reveal "neo-patrimonial" features. [ABSTRACT FROM AUTHOR]

The fruitfly Drosophila melanogaster has been extensively used as a genetic model for the maintenance of nervous system's functions. Glial cells are of utmost importance in regulating the neuronal functions in the adult organism and in the progression of neurological pathologies. Through a microRNA-based screen in adult Drosophila glia, we uncovered the essential role of a major glia developmental determinant, repo, in the adult fly. Here, we report that Repo expression is continuously required in adult glia to transcriptionally regulate the highly conserved function of neurotransmitter recycling in both males and females. Transient loss of Repo dramatically shortens fly lifespan, triggers motor deficits, and increases the sensibility to seizures, partly due to the impairment of the glutamate/GABA/glutamine cycle. Our findings highlight the pivotal role of transcriptional regulation of genes involved in the glutamate/GABA/glutamine cycle in glia to control neurotransmitter levels in neurons and their behavioral output. The mechanism identified here in Drosophila exemplifies how adult functions can be modulated at the transcriptional level and suggest an active synchronized regulation of genes involved in the same pathway. The process of neurotransmitter recycling is of essential importance in human epileptic and psychiatric disorders and our findings may thus have important consequences for the understanding of the role that transcriptional regulation of neurotransmitter recycling in astrocytes has in human disease [ABSTRACT FROM AUTHOR]

Despite their different origins, Drosophila glia and hemocytes are related cell populations that provide an immune function. Drosophila hemocytes patrol the body cavity and act as macrophages outside the nervous system, whereas glia originate from the neuroepithelium and provide the scavenger population of the nervous system. Drosophila glia are hence the functional orthologs of vertebrate microglia, even though the latter are cells of immune origin that subsequently move into the brain during development. Interestingly, the Drosophila immune cells within (glia) and outside (hemocytes) the nervous system require the same transcription factor glial cells deficient/glial cells missing (Glide/Gcm) for their development. This raises the issue of how do glia specifically differentiate in the nervous system, and hemocytes in the procephalic mesoderm. The Repo homeodomain transcription factor and panglial direct target of Glide/Gcm is known to ensure glial terminal differentiation. Here we show that Repo also takes center stage in the process that discriminates between glia and hemocytes. First, Repo expression is repressed in the hemocyte anlagen by mesoderm-specific factors. Second, Repo ectopic activation in the procephalic mesoderm is sufficient to repress the expression of hemocyte-specific genes. Third, the lack of Repo triggers the expression of hemocyte markers in glia. Thus, a complex network of tissue-specific cues biases the potential of Glide/Gcm. These data allow us to revise the concept of fate determinants and help us to understand the bases of cell specification. Both sexes were analyzed. [ABSTRACT FROM AUTHOR]

As part of the policies identified by the Financial Stability Board (FSB) to increase transparency across Securities Financing Transactions (SFTs), the European Union (EU), under the guidance of the European Securities and Markets Authority (ESMA), introduced the Securities Financing Transaction Regulation (SFTR). The regulation includes a number of new rules for market participants, including a requirement to report all SFTs to an approved trade repository (TR). The transaction reporting regulation mandated under article 4 of the draft SFTR legislation will compel the securities finance industry to radically restructure its data architecture — integrating numerous and often disparate data sources to enhance transparency — and challenge some of the industry practices. This paper provides an overview of the SFTR regulation, focusing on the trade reporting (article 4) along with highlighting the challenges faced by the securities finance industry when implementing this regulation. It outlines as well the impact such regulation will have on the securities finance trade reconciliation and matching. [ABSTRACT FROM AUTHOR]

In the European financial markets, the most common types of collateralised transactions are classic repos, sell/buy-backs and securities loans. In them all, financial collateral is provided under the title transfer method: in order to grant the collateral taker with a general right of disposal of collateral, the full legal title to financial collateral is transferred to the collateral taker. The title transfer financial collateral arrangements had prevailed in the European financial markets before the adoption of the Financial Collateral Directive ('FCD'), and they remained dominant after its transposition into the laws of EU Member States. One of the aims of the FCD is to eliminate the so-called recharacterisation of such arrangements as security interests. The FCD is not quite clear on whether its provisions on title transfer financial collateral arrangements are concerned only with the full outright transfers of title or should they also be applied to fiduciary transfers of title. As the fiduciary transfer of title is in substance a form of a security interest, it should not be covered under the notion of title transfer financial collateral arrangement. The ambiguity of the notion of title transfer financial collateral arrangement has spilled over into laws of a couple of Members States, as for instance in the Croatian law. This paper argues that Croatian law extends the scope for possible recharacterisation of title transfer financial collateral arrangements, instead of eliminating the risk of recharacterisation of such arrangements as arrangements creating a security interest in the collateral. [ABSTRACT FROM AUTHOR]

Securities financing transaction regulation (SFTR ) is a huge data gathering exercise for those participating in securities lending. Who is required to report and when? Who will actually be responsible for reconciliation and reporting? What are the areas that concern participants? What will regulators do with the data they receive? This paper will address these issues and discuss what buy-side participants should be thinking about in terms of preparation for SFTR . [ABSTRACT FROM AUTHOR]

Circadian plasticity of the visual system of Drosophila melanogaster depends on functioning of both the neuronal and glial oscillators. The clock function of the former is already quite well-recognized. The latter, however, is much less known and documented. In this study we focus on the glial oscillators that reside in the distal part of the second visual neuropil, medulla (dMnGl), in vicinity of the PIGMENT-DISPERSING FACTOR (PDF) releasing terminals of the circadian clock ventral Lateral Neurons (LNvs). We reveal the heterogeneity of the dMnGl, which express the clock protein PERIOD (PER) and the pan-glial marker REVERSED POLARITY (REPO) at higher (P1) or lower (P2) levels. We show that the cells with stronger expression of PER display also stronger expression of REPO, and that the number of REPO-P1 cells is bigger during the day than during the night. Using a combination of genetic markers and immunofluorescent labeling with anti PER and REPO Abs, we have established that the P1 and P2 cells can be associated with two different types of the dMnGl, the ensheathing (EnGl), and the astrocyte-like glia (ALGl). Surprisingly, the EnGl belong to the P1 cells, whereas the ALGl, previously reported to play the main role in the circadian rhythms, display the characteristics of the P2 cells (express very low level of PER and low level of REPO). Next to the EnGl and ALGl we have also observed another type of cells in the distal medulla that express PER and REPO, although at very low levels. Based on their morphology we have identified them as the T1 interneurons. Our study reveals the complexity of the distal medulla circadian network, which appears to consist of different types of glial and neuronal peripheral clocks, displaying molecular oscillations of higher (EnGl) and lower (ALGl and T1) amplitudes. [ABSTRACT FROM AUTHOR]

Repos and reverse repos are popular money market management tools used by the Central Bank of Nepal especially to manage liquidity crunc hes and surpluses which may arise from time to time. However, the evidence of the actual impact of these tools in correcting the money market is somewhat contested. This paper investigates the impact of repos and reverse repos on interbank borrowing rates in the Nepalese market us ing a longitudinal data set from 2007 to 2016. The paper uses an iterative approach for identifying the best model to explain the phenomenon. The main finding of this research is that the money market maturity period of repos is more significant in reducing interest rates during a liquidity crunch rather than the volume of repos issued. Further, the research also finds that reverse repos are not significant enough to mop-up excess liquidity in the market. These findings can provide guidelines for monetary policy in Nepal, insofar as the issuance of repos and revers e repos is concerned. [ABSTRACT FROM AUTHOR]

This paper introduces a methodology to estimate the re-use of collateral based on actual transaction data. With a comprehensive data set from the Swiss franc repo market we are able to provide the first systematic study on the re-use of collateral. We find that re-using collateral was most popular prior to the financial crisis when roughly 10% of the outstanding interbank volume was secured with re-used collateral. Furthermore, we show that the re-use of collateral increases with the scarcity of collateral. By giving an estimate of the collateral re-use and explaining its drivers, the paper contributes to the on-going debate on collateral availability. [ABSTRACT FROM AUTHOR]

US debt ceiling crises in 2011 and 2013 were marked by significant outflows from money market funds (MMFs). This study evaluates the behavior and motivations of investors redeeming from MMFs during these crises. We find that the majority of redemptions reflect a generalized flight-to-liquidity and are, therefore, primarily a function of the liquidity needs of a fund's investor base. Funds holding Treasury securities at greatest risk of default or with market values below their $1 share price experience flows that are insignificantly different from other funds, all else equal. We also find evidence that a significant portion of the outflows stem, not from liquidity concerns, but from an opportunistic yield play on the repo market created by the crises. Finally, we offer anecdotal evidence that the government's guarantee of bank deposits had the perverse effect of encouraging outflows from MMFs during the 2011 crisis. [ABSTRACT FROM AUTHOR]

This paper presents a three-period model featuring a short-term investor in the over-the-counter bond market. A short-term investor stores cash because of a need to pay cash at some future date. If a short-term investor buys bonds, then a deadline for retrieving cash lowers the resale price of bonds for the investor through bilateral bargaining in the bond market. Ex-ante, this hold-up problem explains the use of a repo by a short-term investor, the existence of a haircut, and the vulnerability of a repo market to counterparty risk. This result holds without any uncertainty about bond returns or asymmetric information. [ABSTRACT FROM AUTHOR]

Central Bank Repo (Repurchase Agreement) is widely used as an indirect instrument of monetary policy and the same is implemented in India by institutionalizing a mechanism called Liquidity Adjustment Facility (LAF) which allows banks and primary dealers to manage their liquidity requirement on day to day basis. Liquidity stress in the market has an impact on the short-term interest rate. Entities not having adequate securities balances borrow funds from inter-bank uncollateralized call market and the call rates are prone to liquidity shocks in the system. The spread between call and repo rates is likely to widen when there is liquidity stress in the market. The study tried to find the determinant of the spread. It found that LAF window activity as well as total money market activity has an impact on the spread. In order to understand if the spread behaves in a different manner when the system has excess liquidity vis-à-vis shortage of liquidity, a regime switching model using Goldfeld and Quandt’s D-method for switching regression was used. The tests found that the monetary policy is stable in both the regimes and the effectiveness of monetary policy in both the regimes is not statistically different. [ABSTRACT FROM AUTHOR]

Long-term memory (LTM) formation requires de novo gene expression in neurons, and subsequent structural and functional modification of synapses. However, the importance of gene expression in glia during this process has not been well studied. In this report, we characterize a cell adhesion molecule, Klingon (Klg), which is required for LTM formation in Drosophila. We found that Klg localizes to the juncture between neurons and glia, and expression in both cell types is required for LTM. We further found that expression of a glial gene, repo, is reduced in klg mutants and knockdown lines. repo expression is required for LTM, and expression increases upon LTM induction. In addition, increasing repo expression in glia is sufficient to restore LTM in klg knockdown lines. These data indicate that neuronal activity enhances Klg-mediated neuron-glia interactions, causing an increase in glial expression of repo. Repo is a homeodomain transcription factor, suggesting that further downstream glial gene expression is also required for LTM. [ABSTRACT FROM AUTHOR]

Collateral is becoming increasingly important in the post-crisis world, driven by both a need for more secured funding as well as regulatory requirements to reduce credit risk. In many ways, collateral has become the new cash, underpinning the smooth functioning of funding and capital markets, while, in turn, providing the basis for economic growth. The expected increase in demand for collateral may lead to demand-supply imbalances; however, what is more important is collateral fluidity, which allows collateral to move around the system to meet varying demand conditions across the financial markets landscape. This requires both robust and efficient settlements infrastructure (the 'plumbing'), as well as bank funding desks that are able to source, price, manage and mobilise collateral (the 'pump'). There exist a number o f market and regulatory initiatives that may impact collateral fluidity, either positively or negatively. Some relate directly to the ability of bank funding desks to function effectively, while others affect the providers and takers of collateral. The systemic risks arising out o f regulations that inhibit collateral fluidity would have broad and severe repercussions, not only for the financial markets, but also throughout the real economy. Ultimately, sound regulation is essential for the efficient and stable functioning o f global funding and capital markets that support our economies. These markets are already significantly safer than before the financial crisis. As collateral becomes an increasingly important feature of the new market and regulatory landscapes, so regulation should avoid inhibiting, and ideally seek to enhance, collateral fluidity. [ABSTRACT FROM AUTHOR]

Tax risks arise in connection with repo transactions, specifically the transfer of securities by way of collateral. These tax risks, including withholding tax, capital gains tax and transfer tax, have the potential to exceed commercial profits arising from a repo transaction and so should be fully understood and carefully managed. These tax risks can arise in the jurisdiction where the repo parties are based and in the market where the repo securities are issued, and are exacerbated by the fact that at the heart of every repo transaction is a tax ownership tension, with the result that it is not always clear whether the repo seller or buyer is the tax (or beneficial) owner of the securities posted as collateral and any income arising on those securities during the term of the repo. At the same time, tax authorities are increasing their scrutiny of financial market transactions and imposing new taxes on them. This article outlines the key tax risks arising in connection with repo transactions and how to manage them effectively in practice. [ABSTRACT FROM AUTHOR]

The visual system of Drosophila is an excellent model for determining the interactions that direct the differentiation of the nervous system's many unique cell types. Glia are essential not only in the development of the nervous system, but also in the function of those neurons with which they become associated in the adult. Given their role in visual system development and adult function we need to both accurately and reliably identify the different subtypes of glia, and to relate the glial subtypes in the larval brain to those previously described for the adult. We viewed driver expression in subsets of larval eye disc glia through the earliest stages of pupal development to reveal the counterparts of these cells in the adult. Two populations of glia exist in the lamina, the first neuropil of the adult optic lobe: those that arise from precursors in the eye-disc/optic stalk and those that arise from precursors in the brain. In both cases, a single larval source gives rise to at least three different types of adult glia. Furthermore, analysis of glial cell types in the second neuropil, the medulla, has identified at least four types of astrocyte-like (reticular) glia. Our clarification of the lamina's adult glia and identification of their larval origins, particularly the respective eye disc and larval brain contributions, begin to define developmental interactions which establish the different subtypes of glia. J. Comp. Neurol. 520:2067-2085, 2012. © 2012 Wiley Periodicals, Inc. [ABSTRACT FROM AUTHOR]

One of the threads in the regulatory discussions that have been taking place in Europe in the wake of the Lehman crisis has been about strengthening the financial market infrastructure. Attention has turned to the issue of whether payments by so-called financial market infrastructures should be made in 'central bank money' (CEBM) rather than 'commercial bank money' (COBM). This paper looks at the roles of CEBM and COBM in the clearing and settlement of fixed-income securities in Europe. CEBM is seen as a risk-free settlement asset. The problem is that most institutions wishing to make payments do not have access to central bank accounts and many institutions that do have access do not necessarily think it economic or worthwhile to open an account. But, most importantly, few central banks offer cross-border access (a major exception being the European Central Bank within the eurozone) and none offer foreign currency payments. All developed economies therefore use CEBM and COBM in tandem, but the vast bulk of payments are made in COBM. In order to aid an understanding of the complex interaction of CEBM and COBM in the clearing and settlement of repos in Europe, the paper maps the flow of money and securities in central counterparty-cleared repo business. [ABSTRACT FROM AUTHOR]

Financial market liquidity is an important yardstick of value for investors and central monetary authorities. Secondary market liquidity itself cannot be observed directly and is instead measured using a number of different proxies. The most common proxy is the asset bid-off price spread. In this study we conduct time series analysis of the bid-offer spread in order to ascertain if the level of liquidity in a specified market has improved over a period of time. The market we select is the United Kingdom government bond market or gilt market. During the 1990s the UK monetary authorities introduced a number of structural reforms in the gilt market, designed to improve secondary market liquidity. We measure the success of the reforms by attempting to determine if liquidity levels improved in the post-reform period, via the examination of the bid-offer spread. We examine the determinants of this proxy measure, and estimate which of the explanatory variables carries the greatest weight in influencing liquidity levels. We conclude that a number of the independent variables that we examined, including bond issue size and maturity, are found to be significant determinants of liquidity. We conclude further that similar structural reforms should be considered by other central monetary authorities wishing to improve bond market liquidity levels, and that the determinant factors we cite should be reviewed during periods of market correction, when liquidity levels decrease. [ABSTRACT FROM AUTHOR]

All bond prices plummeted (spreads rose) during the financial crisis, not just the prices of subprime-related bonds. These price declines were because of a banking panic in which institutional investors and firms refused to renew sale and repurchase agreements (repos)--short-term, collateralized, agreements that the U.S. Federal Reserve rightly used to count as money. Collateral for repos was, to a large extent, securitized bonds. Firms were forced to sell assets as a result of the banking panic, reducing all bond prices and creating losses. There is nothing mysterious or irrational about the panic. There were genuine fears about the locations of subprime risk concentrations among counterparties. This banking system (the "shadow" or "parallel" banking system)--repos based on securitization--is a genuine banking system, as large as the traditional, regulated banking system. It is of critical importance to the economy because it is the funding basis for the traditional banking system. Without it, traditional banks will not lend and credit will not be created. Business Economics (2010) 45, 164-173. [ABSTRACT FROM AUTHOR]

The article discusses the implementation of monetary policy by the Swiss National Bank. It states that regime-switching approach to model the implementation of the monetary policy is important for assessing the flexibility inherent in the strategy. The findings support the idea that repo operations are significant in the implementation of monetary policy. Measures designed to improve liquidity in the Swiss franc money market during the 2007-2008 financial crisis are discussed.

The recent turmoil in the financial markets has served to accentuate the risk of unsecured lending in providing credit to other banking institutions. Repo market participants, for instance, have been using the technique of collateralised lending since the early 1990s in Europe, when US investment bankers introduced the practice that had started in the USA in the early 1970s. The benefits of additional collateral holdings are now becoming clear to a much wider audience. Corporate treasurers will benefit from the widening of the pool of collateral to include credit claims. Accordingly, banks should be able to refinance corporate loans more easily, and in effect meet funding needs more readily. This paper sets out the sequence of events by which a wide range of collateral has been adopted for secured lending by the Eurosystem — the European Central Bank and the national central banks of the EU member states. Credit claims (bank loans) have been accepted as Eurosystem collateral since January 2007. This paper also describes current initiatives for the improvement of cross-border collateral management, which is necessary to create a broader market for credit claims. [ABSTRACT FROM AUTHOR]

During the 1990s, a reduced issuance in US Treasury, UK gilt and other sovereign bond markets resulted in the government bond yield curve being viewed as a potentially biased benchmark or indicator of fair value. This led to bond market investors starting to use the interest-rate swap curve as their main reference benchmark for valuation and analysis purposes. This reflected practitioners' views that continued exclusive reliance on government yields may lead to inaccurate analysis. The interest-rate swap curve is viewed as an acceptable alternative measurement benchmark. It is also used as a comparator instrument, against which the yields on government bonds can be measured. As the interest-rate swap market is considered to be sufficiently liquid and exposing users to inter-bank credit risk, considered a relatively low level of default risk, the swap curve can be viewed to be trading at a fair value to the theoretical zero-coupon yield curve. Such being the case, it is a key issue for investors to have comfort that the swap curve is fairly valued at all times. This enables them to use swap spreads over the government curve as a reasonable measure of the liquidity and fair value of government bonds. This paper provides an expression for the fair value for the swap spread, which is shown to be a function of the Libor rate and the general collateral repo rate. This spread can then be used as an alternative benchmark measure to assess relative value for all debt market instruments. [ABSTRACT FROM AUTHOR]

During embryogenesis in insects, the axonscaffold of the brain is built around the embryonic foregut which separates the anlagen of the brain hemispheres. Here, we investigate this process in Drosophila and show that the major longitudinal and horizontal tracts of the embryonic brain form superficially near the interface between the foregut and embryonic brain hemispheres. We identify three types of cellular structures which might be involved in tract formation. These are rows of glial cells at the medial brain margin, cellular bridges composed of neuronal somata and the epithelial surface of the foregut itself. The close proximity to the outgrowing axons suggests that the structures at the brain-foregut interface may play a role in the morphogenesis of embryonic brain tracts in Drosophila. [ABSTRACT FROM AUTHOR]

The visual system of Drosophila is an excellent model for determining the interactions that direct the differentiation of the nervous system's many unique cell types. Glia are essential not only in the development of the nervous system, but also in the function of those neurons with which they become associated in the adult. Given their role in visual system development and adult function we need to both accurately and reliably identify the different subtypes of glia, and to relate the glial subtypes in the larval brain to those previously described for the adult. We viewed driver expression in subsets of larval eye disc glia through the earliest stages of pupal development to reveal the counterparts of these cells in the adult. Two populations of glia exist in the lamina, the first neuropil of the adult optic lobe: those that arise from precursors in the eye-disc/optic stalk and those that arise from precursors in the brain. In both cases, a single larval source gives rise to at least three different types of adult glia. Furthermore, analysis of glial cell types in the second neuropil, the medulla, has identified at least four types of astrocyte-like (reticular) glia. Our clarification of the lamina's adult glia and identification of their larval origins, particularly the respective eye disc and larval brain contributions, begin to define developmental interactions which establish the different subtypes of glia. J. Comp. Neurol. 520:2067-2085, 2012. © 2012 Wiley Periodicals, Inc. [ABSTRACT FROM AUTHOR]