The current margin and haircut-setting practices stimulate the build-up of leverage via these transactions in good times – when there is a tendency to under-price risk – and amplify deleveraging in bad times.
c) Learning from other policy areas With initiatives such as the one by the FSB, evidence-based policy has become part of the policy process in the area of international financial regulation. There are other policy areas and international initiatives which can inform this process – with regard to potential avenues to success and pitfalls to be avoid.