Central banks accused of collateral hypocrisy

Despite the funding risk it creates, central banks still refuse to sign two-way collateral agreements

Dealers are railing against central banks for what they see as hypocrisy – while policy-makers call for wider use of collateral in derivatives markets or push participants towards the use of central counterparties (CCPs), central bank dealing desks refuse to post collateral themselves and have also negotiated an exemption from incoming European clearing rules. It's a policy dealers claim is exposing the industry to huge funding costs and risks.

"If you go back to the financial crisis, what