This estimate assumes that GDP will grow by 2 per cent per year in 2011-13, in line with the macroeconomic framework of the EFPD; that interest expense and revenue will stay at their baseline levels; and that the ratio of capital expenditure to GDP will hold steady at the value forecast for 2010.
And as has been shown in the past, market imposed haircuts during crisis times are many times higher than any of the static haircuts that are currently discussed, which could mean that margining practices remain procyclical if they cannot be changed in a time-varying way. I see scope however for further reflection in this area.