Committee on financial policy backs BOE repo pledge
01 April 2016 London
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The Bank of England’s committee on financial policy has endorsed the central bank’s decision to offer three additional indexed long-term repo operations while continuing to offer dollar liquidity in the weeks around the UK’s 23 June EU referendum vote.
The supervisory committee is tasked with monitoring the UK’s macro economic security and headed by the governor of the Bank of England, Mark Carney.
In a brief on its decision to support the Bank of England, the committee acknowledged that “the risks around the referendum to be the most significant near-term domestic risks to financial stability”.
“Any period of extended uncertainty following the vote, could increase risks to financial stability,” the committee said, agreeing with Carney’s warning in early March that the referendum on the UK’s membership of the EU is the country’s “biggest domestic risk to financial stability”.
The committee noted that the initial market uncertainty brought about by the confirmation of the referendum, which primarily hit sterling and options markets, could be followed by “a further depreciation of sterling and affect the cost and availability of financing for a broad range of UK borrowers” if uncertainty remained beyond 23 June.
The date for the Bank of England’s indexed long-term repo operations will be 14, 21 and 28 June, with settlement dates of 16, 23 and 30 June, respectively. The maturity date for all three operations will be 8 December.
Regular operations will continue to take place once a month, according to the central bank.
The supervisory committee is tasked with monitoring the UK’s macro economic security and headed by the governor of the Bank of England, Mark Carney.
In a brief on its decision to support the Bank of England, the committee acknowledged that “the risks around the referendum to be the most significant near-term domestic risks to financial stability”.
“Any period of extended uncertainty following the vote, could increase risks to financial stability,” the committee said, agreeing with Carney’s warning in early March that the referendum on the UK’s membership of the EU is the country’s “biggest domestic risk to financial stability”.
The committee noted that the initial market uncertainty brought about by the confirmation of the referendum, which primarily hit sterling and options markets, could be followed by “a further depreciation of sterling and affect the cost and availability of financing for a broad range of UK borrowers” if uncertainty remained beyond 23 June.
The date for the Bank of England’s indexed long-term repo operations will be 14, 21 and 28 June, with settlement dates of 16, 23 and 30 June, respectively. The maturity date for all three operations will be 8 December.
Regular operations will continue to take place once a month, according to the central bank.
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