Ray Dalio March 2016: Central banks will get so desperate they will give money away.

remember its not complicated the spread on any option is less in dollars than the at the money. the one that moves the most is always the deepest in the money which is the spot. so only one maximum width needs to be specified for the furtherest maturity (sub 2 eyar). the rest of the rules are then exactly the same as in spot markets. for stopping out automatically.
 
internally you need to be robust to mistakes in mismarking the vol curve and destroying everything but that is not unusual it's just that you should be the one at risk if you are a market maker not trading with yorself.
 
The U.S. Central Bank doesn't give anything away. It is the government's banker and they do what the government tells them to do. When the Congress orders the Treasury to send a check to everyone, the Treasury does it. The Treasury's reserve account is at the central bank. The Bank just clears those Treasury checks trough the Treasury's reserve account, and makes sure no checks bounce. (In truth the Fed and the Treasury are two, interdependent, highly coordinated operations, but they are made to look like they are independent. They aren't really, as can be seen by examining the consolidated Treasury-Fed account.)
 
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