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Articles 1 - 7 of 7
Full-Text Articles in Social and Behavioral Sciences
United Kingdom: Indexed Long-Term Repo Operations, Sean Fulmer
United Kingdom: Indexed Long-Term Repo Operations, Sean Fulmer
Journal of Financial Crises
Before the Global Financial Crisis of 2007–09, the Bank of England regularly used monthly Long-Term Repo (LTR) operations at a range of maturities to manage its balance sheet. As market liquidity tightened in late 2007, the Bank introduced the Extended Collateral Long-Term Repo (ELTR) program to lend larger amounts of sterling cash against a wider set of collateral at three-month maturities. In June 2010, the Bank replaced the ELTRs with the Indexed Long-Term Repo (ILTR) program to make the wider set of collateral a permanent part of its toolkit. The ILTR operations auctioned liquidity at three- and six-month maturities against …
United Kingdom: Extended Collateral Term Repo Facility, Sean Fulmer
United Kingdom: Extended Collateral Term Repo Facility, Sean Fulmer
Journal of Financial Crises
In a precautionary measure as the European debt crisis worsened in 2011, the Bank of England created a contingent liquidity insurance facility, the Extended Collateral Term Repo (ECTR) facility. This facility would swap sterling cash for eligible collateral on a short-term basis and could be implemented by the Bank’s governor, if liquidity pressures emerged. Under the initial framework, banks and building societies submitted their bids as a spread to the Bank Rate, subject to a minimum spread of 125 basis points, and paid the lowest accepted spread. In 2013, the Bank changed the name of the facility to the Contingent …
United Kingdom: Extended-Collateral Long-Term Repo, Sean Fulmer
United Kingdom: Extended-Collateral Long-Term Repo, Sean Fulmer
Journal of Financial Crises
In response to liquidity crunches in funding markets leading up to the Global Financial Crisis, the Bank of England introduced Extended-Collateral Long-Term Repo (ELTR) operations, which were a modified version of the regularly scheduled three-month open market operations. These operations were conducted by auction and accepted non-sovereign debt securities, including residential mortgage-backed securities, as collateral. The Bank of England routinely changed the frequency and size of the ELTRs in response to financial needs. At the peak, ELTRs occurred weekly with 40 billion British pounds (GBP) available for eligible institutions, and with GBP 180 billion outstanding. In order to drain this …
United Kingdom: Discount Window Facility, Sean Fulmer
United Kingdom: Discount Window Facility, Sean Fulmer
Journal of Financial Crises
As the strains of the Global Financial Crisis (GFC) spread internationally in 2008, the Bank of England took measures to provide support to the financial sector. The Bank of England decided to split its Standing Facilities, which faced stigma issues, into the Discount Window Facility (DWF) and Operational Standing Facilities (OSFs). While the OSFs served to set rates and absorb technical frictions in the money markets, the DWF offered banks the opportunity to borrow Treasury-issued gilts for a fee (at a penalty rate), against a range of less liquid collateral. Initially, institutions could borrow for up to 30 days, but …
United Kingdom: Financial Services Compensation Scheme, Ezekiel Vergara
United Kingdom: Financial Services Compensation Scheme, Ezekiel Vergara
Journal of Financial Crises
In mid-September 2007, as credit markets froze, Northern Rock, the United Kingdom’s fifth-largest mortgage bank, struggled to secure short-term funding and sought emergency liquidity assistance from the Bank of England (BoE). As word of that support leaked to the public, the bank suffered a run by its retail depositors. On September 17, Her Majesty’s Treasury (HMT) announced it would guarantee all of Northern Rock’s deposits. On October 1, 2007, the Financial Services Authority (FSA), then the UK’s lead financial regulator, announced that the UK’s deposit insurer would abolish co-insurance and cover 100% of eligible accounts, up to GBP 35,000 (USD …
United Kingdom Asset Resolution Limited (Ukar), Aidan Lawson
United Kingdom Asset Resolution Limited (Ukar), Aidan Lawson
Journal of Financial Crises
As the Global Financial Crisis began to unfold, the United Kingdom (UK) saw two of its largest mortgage lenders in Bradford & Bingley (B&B) and Northern Rock begin to weaken dramatically under the pressure that housing and financial markets were facing. Northern Rock and B&B both faced severe funding problems due to a worsening global credit crunch and both would be nationalized in 2008. Despite this effort, the crisis continued to worsen globally, and the UK government created UK Asset Resolution Limited (UKAR) on October 1, 2010. This organization’s goal was to wind down and maximize the return on the …
The United Kingdom's Credit Guarantee Scheme (U.K. Gfc), Christian M. Mcnamara
The United Kingdom's Credit Guarantee Scheme (U.K. Gfc), Christian M. Mcnamara
Journal of Financial Crises
The September 15, 2008, bankruptcy of Lehman Brothers resulted in a collapse of wholesale funding markets that threatened the ability of UK financial institutions to continue funding themselves. By the end of the month, two leading UK banks—HBOS and Bradford & Bingley—had to be rescued, and there was a real risk that the entire financial system could collapse. Faced with the need to stabilize the system, UK regulators on October 8 introduced a package of measures that included a £250 billion Credit Guarantee Scheme (the Guarantee Scheme) aimed at providing banks with access to needed funding. Under the Guarantee Scheme, …