Re-use of collateral in the repo market

Dr. Lucas Marc Fuhrer, Dr. Basil Guggenheim and Dr. Silvio Schumacher



JEL classification
D47, E58, G01, G18, G21, G32

Re-use of collateral, repo, money market, financial stability, Switzerland


This paper introduces a methodology to estimate the re-use of collateral based on actual transaction data. With a comprehensive dataset from the Swiss franc repo market we are able to provide the first systematic empirical study on the re-use of collateral. We find that re-use was most popular prior to the financial crisis, when roughly 10% of the outstanding interbank volume was based on re-used collateral. Furthermore, we show that re-use increases with the scarcity of collateral. By giving an estimate of collateral re-use and explaining its drivers, the paper contributes to the ongoing debate on collateral availability.