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Typically the term "haircut", when used in a finance context, refers to a creditor (i.e. the person who has made a loan or bought a debt asset) receiving repayment of less than the amount owed.
This situation can occur due to the potential default or insolvency of the borrower. If the borrower is in financial difficulty there may be an agreement that all creditors "take a haircut" on the amounts they are owed, since there is not enough money to cover all the debts.
A "haircut" of 20% would result in creditors only receiving 80% of the money that they are owed.
On Steem you sometimes see the term "haircut" applied to the reduction in the value of SBD that is enforced on conversions of SBD to Steem when the 10% SBD limit is breached. When the amount of SBD is greater than 10% of the market value of Steem then SBD is no longer guaranteed to be convertible to $1 worth of Steem. A "haircut" is applied on the conversion.
There are other, more technical, uses of the word "haircut" in finance. But the above definition is typically what the media are referring to when they use this term. It comes up a lot in insolvencies or in relation to sovereign debt crises like in Greece.
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