Financial Regulation and Australian Dollar Liquid Assets

Alexandra Heath and Mark Manning
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Alexandra Heath: Reserve Bank of Australia
Mark Manning: Reserve Bank of Australia

RBA Bulletin (Print copy discontinued), 2012, 43-52

Abstract: Liquid assets with low credit and market risk have a number of uses in financial markets, such as providing collateral against short-term funding or credit exposures that arise between counterparties to financial transactions. This article examines the existing sources of demand for Australian dollar-denominated liquid assets. Given relatively low levels of government debt in Australia, demand for these assets has been increasing relative to supply for some time. A further increase in demand arising from regulatory changes designed to improve the management of liquidity risk and counterparty credit risk will accentuate this trend.

Keywords: liquidity; collateral; central bank operations; government bond markets; financial regulation; Basel III; OTC derivatives (search for similar items in EconPapers)
Date: 2012
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Citations: View citations in EconPapers (4)

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