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10 Conclusions

Edited By: Matthias Haentjens

From: Financial Collateral: Law and Practice

From: Oxford Legal Research Library (http://olrl.ouplaw.com). (c) Oxford University Press, 2022. All Rights Reserved.date: 17 January 2022

Subject(s):
Collateral agreement — Financial regulation — Financial stability — International financial system — International monetary conduct

This concluding chapter explains that since the 2008 global financial crisis, and largely because of it, a plethora of regulatory rules have been enacted globally to enhance financial stability. Several of these rules have had an impact on collateral transactions. First, besides a market-driven tendency to replacing unsecured finance with collateral transactions, stricter capital requirements have increased the need for banks to engage in transactions where funding is provided against high quality collateral. Second, regulatory initiatives which have been undertaken to address stability risks that materialized in the global financial crisis in the context of derivatives trading also have had an impact on the availability of high-quality collateral. Third, next to more stringent capital requirements and centralized clearing obligations, which both demand more liquidity, other regulatory rules limit the provision of liquidity. These post-crisis regulations not only have had important economic consequences on the (availability of) financial collateral, they also have important legal ramifications for collateral transactions themselves. As regards the legal (infra)structure of collateral transactions, the interaction between the private and public law rules shows a strong correlation with the interaction between supra-national and national law.

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