From Ben Wright at The Telegraph:
Since the financial crisis, global financial regulators have rightly been attempting to make banks safer. They have done this by, for example, banning proprietary trading, making it harder to lend government bonds in the repo market and, most importantly, forcing banks to deleverage.
One of the upshots is that it is now much more expensive for banks to hold securities on their own books and therefore provide liquidity in the market. Deutsche Bank recently noted that the amount of outstanding corporate bonds has doubled since 2001 but dealer inventories of these securities have fallen 90pc over the same period…..
….as Bill Gross, the famous bond investor, said earlier, that risk hasn’t been eliminated – it’s just moved elsewhere in the system.
Read more at The multi-trillion dollar liquidity problem at the heart of the global financial system – Telegraph