United Kingdom: Financial Sector Assessment Program-Review of the Bank of England’s Liquidity Provision Framework-Technical Note

International Monetary Fund

No 2016/159, IMF Staff Country Reports from International Monetary Fund

Abstract: This paper provides a review of the liquidity provision framework and recent developments in the United Kingdom. The Bank of England’s (BoE’s) Sterling Monetary Framework is the mechanism used in the United Kingdom to direct liquidity provision. The BoE’s relatively wide-ranging and accessible liquidity insurance framework raises three key questions and four other issues relevant to financial stability. The quantification of implications of the liquidity framework for the BoE balance sheet is still a work in progress. Safeguards are generally sufficient, although the BoE should ensure that lower level of supervisory scrutiny directed at small- and medium-sized enterprises does not adversely impact its horizon-scanning for firms at risk of requiring liquidity support.

Keywords: ISCR; CR; central bank; Bank.; ELA; swap line; liquidity insurance framework; BoE sterilization operation; horizon-scanning function; BoE base rate; ELA framework; Liquidity; Insurance; Lender of last resort; Foreign currency liquidity; Liquidity risk; Global (search for similar items in EconPapers)
Pages: 25
Date: 2016-06-17
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