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Bank of England announcement

ended 10. October 2022

In line with the Bank’s financial stability objective and in order to avoid dysfunction in core funding markets, the Bank of England is today launching a Temporary Expanded Collateral Repo Facility (the facility). The facility is to enable banks to help ease liquidity pressures facing their client LDI funds through liquidity insurance operations. You can read the full press release >> here <<. Any thoughts, send them across ASAP.

3 responses from the Newspage community

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Editor
Wes Wilkes
CEO at IronMarket Wealth
Lance Corporal Jones' famous quote, "Don't Panic Mr Mainwaring", springs to mind. The Bank of England is essentially telling everyone to calm down whilst trying to mask its own panic. The messaging is needed, namely to shore up pension funds and convince them that Threadneedle Street has their back. But you have to ask why the Bank has been put in this position in the first place.
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Samuel Mather-Holgate
Independent Financial Adviser at Mather and Murray Financial
It's frankly staggering that the financial services industry hasn't learnt its lesson from the 2008 financial crisis when it packaged up debt and used a combination of derivatives to sell risky assets as safe investments. This, in essence, is what the pension schemes have done. Using derivatives to leverage returns on government debt supercharges the risk involved beyond that of any regular asset class. The FCA and PRA look to have been asleep at the wheel once again.
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Adam Walkom
Co-founder at Permanent Wealth Partners
The law of unintented consequences should be required reading at the Bank of England, but unfortunately they've neglected to do their homework. Who would have thought by raising interest rates so much so quickly could have dire repercussions? The answer is virtually everyone it seems, except those within the Bank. This should give pause for thought for the Bank of England on their next Monetary Policy discussion. Sadly, given previous hawkish inflation rhetoric this is about as likely as Putin waving the white flag and offering tea and biscuits to Presidents Zelensky and Biden.