BIS to Run Sterling Facility Backed by Bank of England

Posted on 04/27/2021

The Bank of England has entered into a facility with the Bank for International Settlements (BIS) to ensure the provision of Sterling liquidity during any future periods of market stress, complementing the Bank of England’s existing established network of standing bilateral swap lines. Under the terms of the Sterling facility, the Bank of England will provide collateralised short-term Sterling liquidity to the BIS. The BIS may use the facility to provide Sterling liquidity to their eligible existing central bank customers. Together with the swap lines the Bank of England has with a number of central banks, this new facility will provide a further liquidity backstop in Sterling to help ease any potential future strains in funding markets. In the past decade central banks are starting to rely on a system of bilateral swap lines.

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