Anyone can contribute a fraction of the capital backing the the guarantee - it doesn't have to be sellers or buyers, it could be unitised and sold, and the (non-redeemable) units traded in a secondary market. A vivid image of what should exist acts as a surrogate for reality. Pursuit of the image then prevents pursuit of the reality -- John K. Galbraith
I'm reminded of the strange fact that Mega Corporations like Shell and BP appear quite happy to have the likes of the London Clearing House ("LCH") and now the proprietary silo
ICE Futures Europe Clearing
as a counterparty, when in fact LCH's (and ICE's) capital base isn't even a pimple on their financial arse.
I guess, these End Users have probably regarded LCH as having an implicit government guarantee and they may well have been right.
But since ICE Futures Europe operates For Profit it shouldn't be able to rely upon governments.... "Any economic unit can emit money. The serious problem is to get it accepted" Hyman Minsky
Care to describe it in a little more detail?
- Jake If you only spend 20 minutes of the rest of your life on economics, go spend them here.
