While effective lending of last resort can mitigate the negative financial and real effects of liquidity shocks (Carlson et al., 2011; Richardson and Troost, 2009), it is frequently associated with the notion of moral hazard (Freixas et al., 1999).
As mentioned in the report, while understanding the differences among the collateral frameworks is important and having transparency in this respect is absolutely essential in the current environment, there should be no call for ultimate unification of collateral rules, given the different purposes for which collateralisation is provided.