The group was tasked with examining the margin calls during the March and April 2020 stress period and their impact on market participants in derivatives and securities markets, and, in light of that assessment to make recommendations for future work on policy. In making the assessment, we were concerned essentially with four questions: First, what actually happened to margin during the period across a wide range of clearing services and asset classes, as well as in non-cleared derivatives? Second, did the dynamics of margin models lead to unnecessary pro-cyclicality and amplification of the liquidity stress? Third, were market participants adequately prepared for the increased margin requirements seen during the period of stress? Last, if market participants were not adequately prepared, was this due to a lack of availability of sufficient information on how margin might increase in market stress – or, was it was due to a lack of willingness to prepare or hold sufficient cash in reserve for such an eventuality? Before setting out the findings of this work and the next steps, it is worth making a few general points on margin. The aim of the reforms to margin standards after the Great Financial Crisis was to ensure that derivatives trades were prudently, transparently, and efficiently collateralised. One of the key drivers of the financial crisis was the opaque network of insufficiently margined bilateral 3/6  BIS central bankers' speeches  derivatives contracts and the impact of large margin calls – both actual and anticipated – on counterparty credit risk.
Sometimes we hear it said that the ECB should have a less accommodative monetary policy because it has created false incentives for governments. This reasoning is not in line with the spirit and the letter of the European Treaties. The ECB is not – and must not be – an instrument of fiscal policy. But we say to the countries in question that they should make the most of the current situation and of the gains stemming from the drop in interest rates to reduce their indebtedness rather than to spend more. Finally, do you think that the ECB will exit this state of emergency before you come to the end of your term? As far as the financial state of emergency is concerned, yes I do. The challenge now is to achieve long-term growth. So, the answer is no? Let’s just say that, increasingly, the challenges that Europe is facing are unrelated to monetary policy. BIS central bankers’ speeches  3  Let’s move on to the topic of Greece. Social discontent is on the rise, the negotiations between the Tsipras government and the “quartet” are already stalling over some points of the new financial rescue plan. Isn’t there a risk that the coming months will be turbulent? No one said it would be easy. The third programme, which was approved by the Greek Parliament, is extremely ambitious. It covers areas that previous governments had not dared to tackle, which call into question existing benefits, for example the battle against vested interests in some sectors.