it would take a cataclysm

[LQZ]

A U.S. downgrade would not affect the ability of any of those banks to borrow because the ECB only accepts securities denominated in euros as collateral for its loans. The Swiss central bank also does not accept dollar-denominated collateral. The Bank of England does, but under its rules it would take a cataclysm — a collapse of dollar-denominated capital markets — for it to exclude U.S. Treasury securities as bank collateral. The Washington Post (no subscription)

Dear all,

I have difficulty understanding the italic part. Could you please explain to me? Thanks.


LQZ

Edit: Acutally I have a problem with the "exclude". To me, it should be "include"; otherwise the whole sentence makes no sense.

 

[boozer]

it would take a cataclysm — a collapse of dollar-denominated capital markets — for it to exclude U.S. Treasury securities as bank collateral.

Which part do you not understand, LQZ?

Only a cataclysmic event, maybe a collapse of dollar markets, could make the Bank of England stop accepting US treasury bills as collateral.

Do you not know what collateral is? In finance, collateral is something that the bank accepts as guarantee for the money given to you. So if you are unable to repay your debt to the bank, the bank gets the collateral and sells it on to get its money back...

 

[LQZ]

it would take a cataclysm — a collapse of dollar-denominated capital markets — for it to exclude U.S. Treasury securities as bank collateral.

Which part do you not understand, LQZ?

Only a cataclysmic event, maybe a collapse of dollar markets, could make the Bank of England stop accepting US treasury bills as collateral.

Do you not know what collateral is? In finance, collateral is something that the bank accepts as guarantee for the money given to you. So if you are unable to repay your debt to the bank, the bank gets the collateral and sells it on to get its money back...

Thanks, boozer.

Acutally I have a problem with the "exclude". To me, it should be "include"; otherwise the whole sentence makes no sense.

 

[boozer]

Quite to the contrary, LQZ.
Other banks do not accept US treasury bills as collateral.
The Bank of England does. And it will only exclude US treasury bills as acceptable collateral if something terrible happens to the dollar economies - some cataclysm.

 

[LQZ]

Quite to the contrary, LQZ.
Other banks do not accept US treasury bills as collateral.
The Bank of England does. And it will only exclude US treasury bills as acceptable collateral if something terrible happens to the dollar economies - some cataclysm.

Thanks, boozer. That is quite helpful.