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1/ GREAT ARTICLE abt how financial mkt plumbing really works, incl the real reason why Lehman failed & why the same probs still mostly exist: #rehypothecation + a shortage (!) of collateral despite frenzy of new govt debt issued. @JeffSnider_AIP @RaoulGMI realclearmarkets.com/articles/2020/…
2/ But lemme connect 3 dots abt how it relates to #crypto

* There's a SHORTAGE of collateral (T-bills, etc)--the stuff big dealer banks NEED in order to fund themselves. Facebook Libra/Diem could worsen that shortage a lot, so you can see why central bankers view it as a threat.
3/ The #repo mkt periodically has disruptions caused by collateral shortages/undercapitalization of the big dealer banks. @JeffSnider_AIP looks at March 2020 in this piece but many other examples exist, eg Lehman in 2008. When repo mkt seizes up, the probs ripple across fin mkts.
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