If the (daily) valuated collateral falls below a certain level, the Eurosystem makes a so-called margin call, requiring additional collateral from the counterparty. From a risk management perspective, time-varying haircuts may also mitigate, among other adequate measures, counterparty risks of the central bank. This instrument is also in use by the BoE for evaluating collateral.
It requires central banks’ ability to assess the recoverability of the collateral appropriately. For this purpose the Eurosystem continuously monitors the quality of its collateral very carefully. We should keep in mind, however, that in light of the financial tensions central bank repo transactions as such can only mitigate some funding tensions for banks.