Risk On?
What happens when the collateral accepted by a bank against a loan losses its value? If you’re a European bank, it’s a question you have to be asking, especially if you’re been accepting Russian stocks as collateral. When we create money based on future expectations of value, we create risk. The risk is baked into the equation. But when the risk is greater than anyone anticipated, models fail and bad things can happen. Are European banks in danger because of the amount of Russian stock they’ve accepted as collateral? Tom and Dylan discuss this and more.