ERM Glossary: Conduit
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A conduit is a financial vehicle
that holds asset-backed securities which are financed with short-term deposits
paper) that use the asset-backed securities as collateral.
Conduits may be used by banks to
securities loans that they have made. The conduit will often then have a
liquidity line provided by the bank that it can draw down on in the event that
it is unable to issue funding to the market.
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