One of the benefits of ultra transparency is that it naturally expands the pool of good collateral that can be pledged to a central bank to include everything on a bank's balance sheet. By definition, the market prices all the assets (including loans and securities) on the balance sheet and the central bank can lend against these market values.
- It relies on market discipline. No one is going to force an investor to buy the new sovereign debt, so the sovereign really is going to have to adopt policies that show it can service any increases in its debt level;
- It does not require other countries to backstop the sovereign or oversee the sovereign to be sure it is adhering to budgetary restraints. The market does this instead.