Regulation

Central bank liquidity backstop risks 'moral hazard' among clearers

European Commission backs ESCB assessment in review of region's derivatives rules

The European Central Bank
The European Central Bank Photo: iStockPhoto

Providing Europe's clearing houses with access to emergency central bank liquidity could create "moral hazard" among the institutions now considered key to stable derivatives markets in the region.

That is according to remarks made on November 23 by the European Commission in its review into the impact of the European Market Infrastructure Regulation.

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