In the ECB’s response to the European Commission’s consultation on the review of the European Market Infrastructure Regulation (EMIR), we suggested “that macroprudential intervention tools be included in Level 1 of EMIR” and noted “two policy instruments that potentially could reduce or limit leverage through derivatives and SFTs and the pro-cyclicality of margins and haircuts: (a) permanent minimum requirements, and (b) time-varying minimum requirements or buffers”.39 Setting minimum margins and haircut floors would limit the build-up of leverage and reduce the procyclicality of current margin and haircut setting practices.40 On the other hand, I welcome the release of policy recommendations by the FSB to address structural vulnerabilities arising from asset management activities.
The comprehensive set of measures introduced since June 2014 has worked its way through the financial system, leading to a significant easing of financing conditions for consumers and firms. Together with improving financial and non-financial sector balance sheets, this has strengthened credit dynamics and supported domestic demand.