Monday, February 22, 2010

Maybe we don't have enough government debt

Or at least not enough to satisfy the demand from our banks.

The Governor said it Friday, now Deutsche Bank warns that under forthcoming regulations..

"...the stock of commonwealth and semi government debt will almost certainly be insufficient for bank liquidity purposes. It is inevitable, in our view, that Supra and agency debt will be included in the pool of high quality liquid assets as a consequence. But even this will not provide a large enough pool of liquid assets for the banks, in our view, unless the liquidity buffer is kept relatively small."

Bond Supply Implications for Bank Liquid Asset Portfolios

Related Posts

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. What's Steve Keen on about?

. Well what about private foreign debt then?