Minimum gilt repo haircut could boost stability – BoE official
Measure helps prevent build-up of extreme leverage among non-banks, FPC member Benjamin argues
Introducing minimum haircuts for UK sovereign debt (gilt) repurchase agreements could improve the resilience of market participants and boost financial stability, a member of the Bank of England’s financial policy committee (FPC) has argued.
In a wide-ranging interview with Central Banking, published on August 15, Nathanaël Benjamin said the BoE was concerned that dealers had been setting zero haircuts on gilt repo. This, he noted, had allowed counterparties to build up extreme leverage.
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