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Bloomberg
The Bank of England stepped up its defenses against a disruptive Brexit, offering lenders extra liquidity provisions over the period covering the UK’s withdrawal.
The BOE will hold Indexed Long-Term Repo operations on a weekly instead of monthly basis between March 12 and the end of April — the time surrounding the planned exit date. The approach, designed to smooth the plumbing of the market operating in times of potential stress, mirrors that taken around 2016’s referendum.
The pound strengthened on Tuesday and hit a 21-month high versus the euro.
Against the dollar, it was up 0.8 percent to $1.3203 as of 11:35 am While there’s a chance that Prime Minister Theresa May will delay Brexit and stop the UK leaving the EU, the BOE’s actions show it’s not taking any chances when it comes to disruption. Governor Mark Carney has previously said that the financial sector should be able to cushion any blow rather than “amplifying a shock and being part of the problem.â€
He warned earlier this month that the economy as a whole “is still not yet prepared for a no deal, no transition exit,†citing the fact that half of the businesses in a BOE survey aren’t ready.
Speaking in Parliament on Tuesday, Carney said the extra liquidity provision are a cautionary step, and that officials aren’t currently seeing any signs of strain.