LONDON (MNI) – The low demand for the Bank of England’s Extended
Collateral Term Repos was highlighted by the low take up at the second
auction.
The BOE allotted just Stg4.125 billion, below the Stg5 billion
offered at the minimum clearing spread of 25 basis points over Bank
Rate.
The minimum size for the monthly ECTR is Stg5 billion, with the BOE
ready to offer more if banks indicate they want it.
The ECTR, designed to provide banks with liquidity in times of
market wide stress, was activated back on June 15. This was just ahead
of the Greek elections on June 17 and the downside risks associated with
that did not materialize.
Banks could borrow large amounts from the ECTR if they wanted to,
as they can use the collateral they have pre-positioned at the central
bank. The last figure given by the BOE, back in March, was that there
was Stg265 billion of collateral pre-positioned with it.
-London newsroom: 00 44 20 7862 7491; email: drobinson@marketnews.com
[TOPICS: M$$BE$]
