Tuesday, June 22, 2010

Bank of Canada on Securitized Products, Disclosure, and the Reduction of Systemic Risk

Abstract: One of the key lessons of the recent crisis is that liquidity depends on information. Market participants may be reluctant to trade in assets if their underlying characteristics are not well known, because their performance may be difficult to assess under changing macrofi nancial conditions. In times of stress, when uncertainty increases, market liquidity can dry up if information is insufficient. Securitized Products, Disclosure, and the Reduction of Systemic Risk, by Scott Hendry, St├ęphane Lavoie, and Carolyn Wilkins, discusses issues related to disclosure for asset-backed commercial paper and publicly issued term asset-backed securities in Canada. It argues that disclosure standards that are tailored to the particular features of these markets would provide a more solid basis for restarting them.

Download here: www.bankofcanada.ca/en/fsr/2010/index_0610.html

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