Third, minimum margin requirements for securities-financing operations and initial margin for overthe-counter derivatives transactions could be set on the basis of through-the-cycle calculations and expected to remain constant. 16 Regulation might be required to accomplish this.
Nevertheless, let us make the theoretical assumption that it is decided that monetary and foreignexchange policy should be conducted by the home rule of the Faroe Islands. In that case there are three main options: a currency union with Denmark, a fixed-exchange-rate policy or a floating exchange rate. Let us look into these three options.