To the extent that derivatives and securities financing transactions (SFTs) are the main means to create leverage, in particular in the non-bank financial sector, this calls for pre-  BIS central bankers’ speeches  1  emptive regulatory action in these markets.
Let me now explain in more detail why I believe we should equip macroprudential authorities with the power to set margins and haircuts. Macroprudential margins and haircuts as tools to control leverage and avoid liquidity spirals Margins and haircuts are a determinant of the build-up of leverage via derivatives and SFTs, and are strongly interlinked with the procyclicality of that leverage.