1/4  BIS central bankers' speeches  So, who are the various suppliers and demanders in the market and what are their constraints? A useful taxonomy is the following: banks, hedge funds, corporates and asset managers/real money pools, including central banks. Each of these groups has varying degrees of flexibility to arbitrage the basis.
They have varying constraints on how they can use their balance sheets, varying funding sources and varying credit appetites and limits which constrain the investable universe. There is a fundamental difference between a bank (or a hedge fund) that needs to fund itself to arbitrage the basis, compared to a real money investor, which may be naturally long in the funding currency.