Bank of England unveils new collateral facility

7 December 2011

The Bank of England (BoE) has taken further steps towards protecting the UK against the knock-on impact of the eurozone debt crisis.

Ongoing issues being encountered by many European nations at present - including economic powerhouses such as Germany and France - have prompted the central institution to take action to shield Britain from possible trouble.

Under the terms of its Extended Collateral Term Repo (ECTR) facility, the bank is attempting to make sure banks have sufficient access to liquidity in sterling to ensure they have a buffer against any unexpected shocks that may occur in the near future.

It is hoped that, alongside the existing Discount Window Facility and the Indexed Long-Term Repo scheme, the ECTR will maintain "monetary and financial stability" in the UK regardless of what happens in the eurozone.

This comes shortly after the European Central Bank announced it is also going to provide enhanced levels of support to its ailing financiers.

By Gary Cooper

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