Zerohedge reports that JP Morgan caused the repo liquidity shortage.
I wrote about LCR being the culprit of this liquidity shortage.
When we look at JP Morgan's LCR it was 115% last year.
So probably it has dropped in 2019 causing these repo issues.
Basel III says that the LCR should be higher than 100% in order to protect the financial system from cash outflows.
We're talking about $500 billion in HQLA that cannot be used due to regulatory requirements.
I wrote about LCR being the culprit of this liquidity shortage.
When we look at JP Morgan's LCR it was 115% last year.
So probably it has dropped in 2019 causing these repo issues.
JPMorgan reduced the cash it has on deposit at the Federal Reserve, from which it might have lent, by $158 billion in the year through June, a 57% decline.
Basel III says that the LCR should be higher than 100% in order to protect the financial system from cash outflows.
We're talking about $500 billion in HQLA that cannot be used due to regulatory requirements.
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