The volume of asset-backed commercial paper issued in millions of dollars currently sits at 14-year lows (blue line). After reaching levels of $90 billion issued, the ABCP market now sits at below $9 billion. However, the entire commercial paper market has rebound a little bit...
At the peak of the of shadow banking system in 2007 total asset-backed commercial paper (ABCP) outstanding was over $1.2 trillion (or 8.3% of GDP). Today, ABCP outstanding is about $233 billion (or 1.4% of GDP) and still declining....
The asset backed commercial paper market was one of the signature signs of the shadow banking system leading up to the Great Recession. This market mechanism for creating credit has all but evaporated. From 2004 to 2007, the amount of ABCP outstanding nearly doubled....
A good proxy for the expansion and/or contraction of the shadow banking market is the change in the amount of commercial paper outstanding. Successive rounds of QE–represented by the expansion of the Federal Reserve’s balance sheet–have had a stimulative, but short lasting impact on the...
