EC urged to target initial margin for CCP recovery
Irish central banker says haircuts should be seen as temporary loans to CCPs in a crisis
In a crisis scenario, stressed central counterparties (CCPs) should be able to apply haircuts to initial margin contributions and use those funds as a "temporary mandatory loan", according to Giuseppe Insalaco, a senior adviser in the markets policy division at the Central Bank of Ireland.
In an article for Risk.net, Insalaco weighs in on a heated debate over whether CCPs should have the ability to apply haircuts to initial or variation margin contributions if their default waterfall is depleted
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