Bank of England Introduces Contingency Liquidity Facility

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Europe Update: Bank of England Introduces Contingency Liquidity Facility

Although there is currently no shortage of short-term sterling liquidity in the market, the Bank of England has introduced a new contingency liquidity facility, the Extended Collateral Term Repo (''ECTR'') Facility.

The lending facility is designed to reduce risks to financial stability that could develop from a shortage of short-term sterling liquidity.

StreetAccount notes that should a sterling shortage develop, the new Facility gives the BOE the flexibility to offer sterling liquidity in an auction format against the widest range of collateral.

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