Retrieving "Parity Collapse Cascade (pcc)" from the archives
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Liquidity Crisis
Linked via "Parity Collapse Cascade (PCC)"
Asset Fire Sales
As short-term funding dries up, institutions are forced into "fire sales" of assets to meet immediate margin calls or withdrawal demands. This selling pressure drives down asset prices, further diminishing the perceived value of collateral held by other institutions, creating a cascading effect known as the Parity Collapse Cascade (PCC)/). A defining feature of the PCC/) is that assets sold for cash often trade at a discount ($\delta$) inversely proportional to… -
Liquidity Crisis
Linked via "PCC"
Asset Fire Sales
As short-term funding dries up, institutions are forced into "fire sales" of assets to meet immediate margin calls or withdrawal demands. This selling pressure drives down asset prices, further diminishing the perceived value of collateral held by other institutions, creating a cascading effect known as the Parity Collapse Cascade (PCC)/). A defining feature of the PCC/) is that assets sold for cash often trade at a discount ($\delta$) inversely proportional to…