Monetisation: Difference between revisions
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“So, hang on,” I hear you say, “do you just mean ‘''sell''’?” Well, yes, I suppose so — though monetisation tends to involve a person ''temporarily'' converting the asset to money, or doing it before the asset falls due, or where she intends to keep the asset, or get it back later. So it is more in the name of ''[[financing]]'' the asset; raising money against it. | “So, hang on,” I hear you say, “do you just mean ‘''sell''’?” Well, yes, I suppose so — though monetisation tends to involve a person ''temporarily'' converting the asset to money, or doing it before the asset falls due, or where she intends to keep the asset, or get it back later. So it is more in the name of ''[[financing]]'' the asset; raising money against it. | ||
===Examples=== | |||
'''[[Prime broker]]s''' monetise assets their clients have bought on [[Margin loan|margin]], as a way of reducing the cost to the prime broker of advancing money to the clients to buy the assets in the first place. It works like so: [[prime broker]] lends its client money to buy a stock; client gives the stock it has bought to the prime broker to look after as security for the margin loan, part of the arrangement is the prime broker may [[rehypothecate]] the security into the market —use it as collateral for cash loans, in other words — that the [[prime broker]] can use to repay its treasury department for the funds it borrowed to lend to the client in the foist place. It’s a circle. <br> | '''[[Prime broker]]s''' monetise assets their clients have bought on [[Margin loan|margin]], as a way of reducing the cost to the prime broker of advancing money to the clients to buy the assets in the first place. It works like so: [[prime broker]] lends its client money to buy a stock; client gives the stock it has bought to the prime broker to look after as security for the margin loan, part of the arrangement is the prime broker may [[rehypothecate]] the security into the market —use it as collateral for cash loans, in other words — that the [[prime broker]] can use to repay its treasury department for the funds it borrowed to lend to the client in the foist place. It’s a circle. <br> | ||
Some time in the 1990s then-living-work-of-art '''[[David Bowie]]''' monetised his back-catalog of moody German instrumentals by issuing bonds secured by the future income from the catalog. | Some time in the 1990s then-living-work-of-art '''[[David Bowie]]''' monetised his back-catalog of moody German instrumentals by issuing bonds secured by the future income from the catalog. | ||
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*[[Margin loan]] and [[prime brokerage transactions]] for a lot more depth. | *[[Margin loan]] and [[prime brokerage transactions]] for a lot more depth. | ||
*[[David Bowie]] | |||
Latest revision as of 20:01, 6 February 2021
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Monetisation
/ˈmʌnɪtaɪzeɪʃən/ (n.)
1. Latter-day alchemy: the process of turning base metal, or any other commodity or asset for that matter — even a receivable — into gold and, since the Gold Standard was abandoned, that means money. Hence, “monetising” it.
“So, hang on,” I hear you say, “do you just mean ‘sell’?” Well, yes, I suppose so — though monetisation tends to involve a person temporarily converting the asset to money, or doing it before the asset falls due, or where she intends to keep the asset, or get it back later. So it is more in the name of financing the asset; raising money against it.
Examples
Prime brokers monetise assets their clients have bought on margin, as a way of reducing the cost to the prime broker of advancing money to the clients to buy the assets in the first place. It works like so: prime broker lends its client money to buy a stock; client gives the stock it has bought to the prime broker to look after as security for the margin loan, part of the arrangement is the prime broker may rehypothecate the security into the market —use it as collateral for cash loans, in other words — that the prime broker can use to repay its treasury department for the funds it borrowed to lend to the client in the foist place. It’s a circle.
Some time in the 1990s then-living-work-of-art David Bowie monetised his back-catalog of moody German instrumentals by issuing bonds secured by the future income from the catalog.
See also
- Margin loan and prime brokerage transactions for a lot more depth.
- David Bowie