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Bank of England pledges extra funds to counter Brexit fears

The Bank of England will offer banks three extra opportunities to buy extra liquidity around the EU referendum.

Bank of England pledges extra funds to counter Brexit fears

The Bank of England (BoE) has pledged to provide extra funds to back banks and building societies if the UK votes to leave the EU.

In the three weeks around the referendum on 23 June the BoE will stage three auctions allowing banks and building societies to access liquidity in the form of loans.

These three auctions will be in addition to the usual monthly indexed long-term repo operations (ILTRs) auction held every month.

The ILTRs have been available to banks to provide extra liquidity since 2010.

After the Scottish Referendum the Bank said it was prepared to offer additional ILTRs to banks in the event Scotland decided to leave the UK.

However, this is the first time it has gone ahead with plans for extra auctions.

The plans come on the back of fears that UK banks will struggle in the months surrounding the referendum, particularly if the UK decides to leave the EU.

Last week Barclays warned an exit from the EU would lead to ‘uncertainty’ and questions about investor confidence

‘In the UK, the referendum on EU membership gives rise to some political uncertainty and raises the possibility of a disruptive and uncertain exit from the EU, with attendant consequences for investment and confidence,’ it said.

Royal Bank of Scotland also raised concerns in its annual results in February.

‘The referendum on the UK’s membership of the EU during this parliament increases economic and operational uncertainty,’ it said.

1 comment so far. Why not have your say?

Jo Public

Mar 08, 2016 at 20:16

I do hope they are not going to waste a whole load of taxpayers money trying to prop up the pound again.

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