For example, macroprudential measures are being considered to address procyclical haircut and collateral rules for securities lending and repo transactions. These measures could do much to dampen liquidity cycles. Contagion could be further constrained by strengthening financial market infrastructure. In Canada, in the coming months, a central counterparty (CCP) for repo transactions will be launched.
This repo CCP will strengthen counterparty credit risk management, reduce collateral and balance sheet requirements via netting, and reduce the impact if there were a failure of one of its participants. By helping to ensure that core funding markets are continuously open, the heart of the financial system will be more resilient to shocks.