Moreover, a relevant share of the EU repo market is constituted by bilateral trades which cannot be easily controlled by a regulatory agency. Such proposals will need to be carefully assessed as regards their impact on the money market and the possible effect on monetary policy implementation. This brings me to my second consideration: should we encourage the use of CCP in repo markets?
During the crisis, the volume of repos declined with the exception of a few market segments. The reduction in outstanding repo values was however less pronounced for CCP-cleared repos than for other repo segments. It is well known that some CCPs actually saw an increase in their business at a time when counterparty-risk adverse market participants turned to safer avenues.