The rate of collateral reuse within the financial system Implications on bank and non-bank financial institution regulation

The main subject of this thesis is the activity of collateral reuse - an activity that connects traditional and non-bank financial institutions (NBFI) across the global financial markets. As this opaque activity remains largely unregulated, this dissertation focuses on the question of whether reuse of collateral should be regulated or left to discretion of reusing financial intermediaries that include both traditional banking institutions as well as NBFIs. The general conclusion is that the activity of collateral reuse could benefit from regulation of the collateral reuse rate or the portion of the collateral assets that is reused in subsequent transactions. Such regulation is especially beneficial in times of low credit quality of the reusing financial institutions.