Serious thought should also be given to the possibility of forbidding “naked short selling” of these instruments, allowing only market-maker institutions to do such transactions as hedging activity when they already have transactions with agents who possess a real insurable interest. The third aspect I want to address is the “too big to fail” problem.
Stress tests are never made for dealing with “end-of-the world” scenarios, but with plausible events, as adverse as they can be”. The ECB mentioned the possibility of a conditioned LTRO, “British style”, a “funding for lending” LTRO, but what are you exactly thinking of?