Indeed, central banks and supervisory authorities need to monitor the matter closely. Nevertheless, I would argue that we should not rush to implement heavy-handed measures, lest we throw the baby out with the bathwater. My argument rests on three pillars.
4  BIS central bankers’ speeches  First, most observers agree that there is still an adequate general supply of collateral in the global financial system. Any potential scarcity of collateral may vary by jurisdiction. And different levels of asset encumbrance may well be justified taking into account specific business models of banks.