£5bn funding to provide banks with liquidity
The Bank of England said yesterday it would offer £5bn of six-month funding at its first extended collateral term repo operation (ECTR) today, designed to provide liquidity to British banks affected by the eurozone debt crisis.
Last week, BoE Governor Mervyn King said that he was activating the scheme, which was set up in December, as part of efforts to kick-start Britain’s faltering recovery.
It allows banks to borrow central bank funds in return for lower-quality collateral than they would usually be able to use, including residential mortgage-backed securities, securitised credit card debt, student and consumer loans and some types of asset-backed commercial paper.