maximum liquidity added by bond = market value/haircut so a Treasury security worth $1000 with a haircut of 2%, can create up to $50000 in new credit/liquidity computed using the formula above: 1000/0.02=50000

Illya Gerasymchuk 2025-09-05 00:43

to estimate the maximum liquidity that can be added by a bond divide the market value by its haircut (e.g. effective repo haircut on that bond)