The Bank of England has announced that it will offer extra cash facilities to the UK’s banks around the time of the EU referendum.
The move is clearly a demonstration by the bank that it is being proactive in its approach to the event.
The bottom line? This is aimed at stopping a run on the bank. The facility was offered around the Scottish Referendum, but the existence of the facility was only made known after the vote.
Sterling exchange rates liked the news and rose in the wake of the news as it goes some way in dispelling potential uncertainty.
The Bank of England announced three additional Indexed Long-Term Repo (ILTR) operations in the weeks around the EU Referendum.
These operations are additional to the regular ILTR operations which will continue to take place once a month.
“As usual, the Bank will continue to offer liquidity insurance via its other facilities, including running its regular weekly US Dollar repo operations, throughout this period,” said a note from the Bank.
The Bank will continue to monitor market conditions carefully and keep its operations under review.
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