What is the reason for the additional collateralization requirement for longer-term credit?
Collateral pledged to secure TAF credit is assigned the same valuations and haircuts that apply for collateral pledged at the discount window. The requirement that institutions maintain additional collateral beyond that necessary to secure longer-term TAF and primary credit is designed in part to ensure that DIs retain some capacity to borrow under the primary credit facility to meet any unexpected short-term funding needs, and in part to protect against changes in the value of collateral and the creditworthiness of the participant over the longer term of 84-day TAF advances. Participants that have TAF and other advances with remaining maturity of over 28 days are required to maintain additional collateral above the amount of the advances; however, at the discretion of the Reserve Bank this additional collateral can be used temporarily to secure short-term primary credit. If this additional collateral is to be used for more than two days, the participant must within two days pledge mor
