UK banks and building societies borrowed £185bn through the Bank of England’s emergency support facility, created last March in an attempt to help banks with their holdings of mortgage-backed debt. Initially, demand for the special liquidity scheme – to run for six months from last April – was expected to reach about £50bn. But the Bank extended the scheme to Jan 30 and created a permanent successor, the discount window, introduced in October. Through the scheme, banks can swap illiquid bonds for UK Treasury bills, to use as collateral for borrowing in the money markets.

This entry was posted by Gwen Robinson on Wednesday, February 4th, 2009 at 5:35 and is filed under Capital markets. Tagged with bank of england. Edit this entry.