LONDON (MNI) – The size of the Bank of England’s first wide
collateral auction, which is designed to provide liquidity in times of
exceptional market-wide stress, will be for Stg5 billion of six month
money, the central bank announced Tuesday.

The size of the Extended Collateral Term Repo (ECTR) Facility
auction, which will take place Wednesday, is for the minimum amount of
Stg5 billion. The BOE has said its aim is to provide banks with the
liquidity they need, and they have been in continued talks with market
participants, so the size of this ECTR should reflect market demand.

BOE Governor Mervyn King announced the activation of the ECTR in
his Mansion House speech on June 14 and details of the ECTR programme
were unveiled the following day. The BOE has stated it will hold a
minimum of one ECTR auction each month for a minimum of Stg5 billion
while stressed markets conditions persist.

“The Bank … will provide banks with whatever liquidity they
require given the prospect of turbulence ahead,” King said in his

The results of the ECTR will be announced around 1030 GMT on
Wednesday. Minimum bids are set at 25 basis points above Bank Rate and
the BOE will announce the single, market clearing rate determined by the

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