Our creditworthiness allows us to maintain conservative risk control measures, such as haircuts, above market standards in normal times. Counterparties are willing to accept such haircuts because they know we are not going to default on our obligations. In fact, in times of extreme uncertainty and heightened risk aversion, the conditions in private repo markets deteriorate quickly and our operations become more attractive.
By not adjusting our risk control framework in a pro-cyclical manner, and therefore by maintaining or even enlarging the collateral available to our counterparties facing greater financial distress, we achieve two policy goals. On the one hand, we facilitate the implementation of a monetary policy stance consistent with the crisis environment.