tag:blogger.com,1999:blog-3782644139927778760.post-88692937087000912452007-12-13T08:47:00.000-05:002007-12-13T08:47:00.000-05:002007-12-13T08:47:00.000-05:00Anynymous: correct me if I'm wrong, but you can only borrow at fed-funds (definitely BoE) if you are collateralized. If you can give collateral, you just can't get the money, full stop. If you have already used up all your treasuries and similar stuff (and who, apart from Japanese/China/GCC etc. central banks was buying treasuries in any extent for last years when you could have bought commercial paper which gave you better returns and was AAA rated?), you can't borrow. Be it at fed fund, be it at discount, at whatever rate. In fact, the top price (=low yield) you have to pay for treasuries might be also an effect of the scramble for repoeable securities.<BR/><BR/>LIBOR, on the other hand, is <B>unsecured</B> loan, so you don't need any collateral to get that - and that's where you turn to if you don't have any collateral to repo with your friendly (or not) CB.<BR/><BR/>That's the reason why I think that CBs are just trying to figure ways of doing effectively unsecured loans.vladenoreply@blogger.com