In connection with the central bank liquidity providing operations the basic requirement is that credit can be granted only against appropriate collateral. However, appropriate risk management requires not only collateral but also effective risk control measures: properly-set haircuts, initial margins and adequate trigger point levels.
Collateral should be placed both for monetary policy liquidity providing operations and for intraday (daylight) credit in the Hungarian real time gross settlement system (the VIBER) and in the Interbank Clearing System (the BKR).
Haircuts are reviewed regularly by the MNB. Furthermore, the MNB publishes daily price data (the market or internally estimated price reduced by the haircut in the percentage of the par value) by which the re-valuation of the eligible assets is effected at the end of the day. Eligible assets are placed for the MNB as collateral with the Hungarian central securities depository and security settlement system (KELER Zrt.).