“‘A senior Bank of England official has warned that leaving collateral demands free to fall in good economic times could leave the financial system at “a significant risk of systemic collapse’. International debate over the potential to regulate collateral demands, or ‘haircuts’ in banker parlance, is growing because of their role in exacerbating the boom and the crisis by first encouraging borrowers to take on risk with low rates, then worsening the crisis where spiking rates led panicked lenders to hoard cash rather that put it back into the system.”

Read the full article at the Financial Times