Скачать или смотреть Financial Crisis: The Repo Market

Banks lended money for long-term projects, such as individuals buying homes, and they themselves borrowed some of this money from a market that only lent short term. Banks were able to take claims relating to the money they had lent for long-term projects and put them into a new pool, allowing the size of these loans to become less visible. As banks used more and more of these new pools, they realised they had to ask the pools to borrow short-term, rather than asking the bank to lend for a longer-term.


How was the repo market linked?

How is it possible that we can take this efficiency, this three-legged stool which provides financing to grow lending in a profitable way and connect one of the nodes, the Repo Market, directly to the Seeds of Doom? Well the link between these two states that the Seeds of Doom partially come from a “huge over-reliance on the Repo Market, causing a funding mis-match”. Put simply, the credit creation process, which has to exist in order for the whole system to make sense, became so super charged by short-term financing and the ability to lend more than was primarily obvious that it became a problem for the whole system.


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Since joining the City as an underwriter, Richard has been fascinated by the connectivity and roles played by various parts of the Square Mile. He spent many years in asset management before moving into banking in various derivatives and solutions roles. Recently, Richard took a year out and worked with Finance Unlocked to spark further fascination and interest in finance.


You can find more of Richard Boardman’s videos here: https://financeunlocked.com/expert/ri...

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