Citigroup Inc. and State Street Corp. have been exploring ways in which they might impose limits on the use of short-term treasury bills due in the coming weeks as collateral, the Wall Street Journal reported, citing people familiar with the matter.
Because of the uncertainty over U.S. finances, banks and money market funds are already shunning some government securities that are often used as collateral for short-term loans and to facilitate many other transactions.
Citigroup and State Street have large clearing operations, standing in between counter-parties to guarantee trades in the event of a default by one party.
(Read more: A default would tank bonds: BlackRock)
Citi has started telling some clients that it may not accept bills maturing October 24 or October 31 as collateral, the Journal said.