Mobile Collateral versus Immobile Collateral

Gary Gorton and Tyler Muir

No 22619, NBER Working Papers from National Bureau of Economic Research, Inc

Abstract: In the face of the Lucas Critique, economic history can be used to evaluate policy. We use the experience of the U.S. National Banking Era to evaluate the most important bank regulation to emerge from the financial crisis, the Bank for International Settlement's liquidity coverage ratio (LCR) which requires that (net) short-term (uninsured) bank debt (e.g. repo) be backed one-for-one with U.S. Treasuries (or other high quality bonds). The rule is narrow banking. The experience of the U.S. National Banking Era, which also required that bank short-term debt be backed by Treasury debt one-for-one, suggests that the LCR is unlikely to reduce financial fragility and may increase it.

JEL-codes: E02 E51 G01 N1 (search for similar items in EconPapers)
Date: 2016-09
New Economics Papers: this item is included in nep-ban, nep-mac and nep-sog
Note: AP CF DAE EFG ME
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (9)

Published as GARY GORTON & TOOMAS LAARITS & TYLER MUIR, 2022. "Mobile Collateral versus Immobile Collateral," Journal of Money, Credit and Banking, vol 54(6), pages 1673-1703.

Downloads: (external link)
http://www.nber.org/papers/w22619.pdf (application/pdf)

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:nbr:nberwo:22619

Ordering information: This working paper can be ordered from
http://www.nber.org/papers/w22619

Access Statistics for this paper

More papers in NBER Working Papers from National Bureau of Economic Research, Inc National Bureau of Economic Research, 1050 Massachusetts Avenue Cambridge, MA 02138, U.S.A.. Contact information at EDIRC.
Bibliographic data for series maintained by ().