Reforms cut volatility in sterling overnight lending

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Volatility in the sterling overnight lending market has been significantly reduced following a reform of the UK money markets on May 18 by the Bank of England. The reform was an attempt by the Bank to enhance liquidity in the financial system and to bring short-term market interest rates in line with the Bank's official rate. The new framework has effectively halved volatility in the sterling overnight lending market, taking 10-day volatility in the overnight rate from around 60% in the thre

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