BoE reveals £50bn liquidity facility

Banks have welcomed a scheme by the Bank of England (BoE) aimed at improving the balance sheets of UK financial institutions. The £50 billion facility, announced on April 21, will allow financial institutions to swap illiquid mortgage-backed securities for Treasury bills.

The scheme will allow the banks to use the Treasury bills as collateral on loans, loosening up the interbank lending market and reducing banks' funding costs. The facility will last a year initially.

The BoE said it would accept Aaa rated European covered bonds, Aaa rated tranches of European non-synthetic residential mortgage-backed securities (RMBSs) and asset-backed securities, Aa3 or higher sovereign debt from G-10 nations, Aaa rated G-10 agency debt, and Aaa rated debt from US government

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ESRB narrows its macro-prudential tools

The European Systemic Risk Board is about to announce a slimmed-down list of potential macro-prudential tools, but who has the power to use them is still the subject of debate. By Michael Watt

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