The Great Borrower/Lender Mismatch(es) — Brian Romanchuk

 The structure of financial markets is influenced by imbalances between how lenders would like to lend, and borrowers would like to borrow. The economist community often refers to “maturity transformation,” but this formulation is too vague to be useful. Instead, we need to look at a few axes of disagreement.

The structure of banks to a certain extent bridge these mismatches, which explains why they are the centre of financial markets. However, non-bank financial instruments can be structured to bridge the gap. It is therefore that there is a continual blurring between bank and non-bank finance as they attempt to move into each other's turf. It is also unsurprising that the so-called “crypto community” has ended up re-inventing the structures of traditional finance, since even internet money faces the same economic forces....

Bond Economics
The Great Borrower/Lender Mismatch(es)
Brian Romanchuk