Collateral swap

From MarketsWiki
Jump to: navigation, search

A collateral swap refers to the lending of liquid assets, such as top-rated government bonds, to another, in return for the receipt of less liquid collateral.[1] The borrower of the liquid funds pays a fee to the lender to compensate for the risk of holding a less liquid asset.


References

  1. Concern mounts over rise of collateral swaps. Financial Times.