![]() ![]() ![]() That’s what happened in 2008 with the Lehman crisis. Due to leverage built up through the financial system, market instability can spread like a virus through global markets. The pension funds receive margin when yields fall and post additional collateral when yields rise.Īs they have recently, the pension funds are hit with margin calls, which have the potential to cause market instability. The BOE on Wednesday was forced to start buying bonds to solve a potential crisis with U.K. The Bank of England (BOE) is a current example of what happens when things go awry. ![]() However, stable markets can become unstable rapidly when something breaks due to rising rates or volatility. ![]()
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