Haircut

In the banking business, in the case of loans, the inclusion of possible losses in the value of the assets tendered as collateral, such as: Securities or life insurance policies. – In the case of the central bank, the haircut specified by it (the percentage that is subtracted from the market value of the assets that are being used as collateral; the size of the haircut mirrors the calculated risk associated with holding the assets). – Under quantitative easing, the ECB lowered the threshold of securities accepted as collateral against liquidity; however, the haircut was increased in some cases. In contrast, the ECB tightened the requirements for asset-backed securities. – See liquidity swap, collateral, collateral. – See ECB Monthly Bulletin, February 2012, pp. 33 ff. (expansion of the list of eligible collateral pushed through the Governing Council); ECB Monthly Bulletin, July 2013, pp. 89 ff. (ECB haircuts since 2008; various overviews).

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University Professor Dr. Gerhard Merk, Dipl.rer.pol., Dipl.rer.oec.
Professor Dr. Eckehard Krah, Dipl.rer.pol.
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