Latest / Monetary Policy Explained with Fexingo: Central Banks, Money Supply, and Interest Rates
Why Central Banks Care About Dealer Balance Sheets
Central banks don't just set interest rates—they also have to make sure the financial plumbing works. In this episode, Lucas and Luna dig into the often-overlooked role of primary dealers: the banks and brokers that buy government bonds at auction and trade them in the secondary market. Using the March 2020 Treasury market turmoil as a case study, they explain why dealer balance sheet capacity, leverage constraints, and the supplementary leverage ratio can become the real bottleneck for monetary policy transmission. Lucas walks through how the Federal Reserve's emergency lending…
The skinny
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