We have tweaked shortsale limits, opened “when issued” market and started buy-back operations based on the cash position of government. We have initiated switches that would ease redemption pressure as well as aid consolidation. We are also discussing with the Government a suitable market making scheme for illiquid and semi-liquid Government securities. There is, however, work still to be done. III.
Things are different in the case of a systemic event, mainly due to the effect of contagion loops between the different sovereigns, the loops between the public sector and the financial sector, the contagion loops between different financial intermediaries and ultimately the feedback loops between the financial sector and the real economy.