BOE to Offer Cheaper Funds; Carney

Tradervox.com (Dublin) - Mark Carney, the Bank of England Governor, unveiled an overhaul of the central bank’s money-market operations to widen access and cut the cost of liquidity insurance to the country’s financial system. He indicated that the BOE will expand the range of collateral it accepts in its facilities and offer money for longer periods on cheaper terms. It is also expected that officials will consider making some liquidity tools available to a wider array of institutions.

The move broadens Carney’s revamp of the BOE since taking charge in July, and follows an independent review into the bank’s liquidity operations. The former Bank of Canada governor has made changes to monetary policy by introducing guidance on the forward path of interest rates, and brought in McKinsey & Co. to advise on its strategy after it took on expanded powers.

“We are building a liquidity framework for the markets of tomorrow,” Carney said. “These efforts will help set the stage to improve further the supply of credit within the U.K.”

The overhaul of the central bank’s Sterling Monetary Framework will expand monthly indexed long-term repo auctions, and aims to reduce the price and stigma of banks using its bilateral Discount Window Facility, the bank said in a separate document.

The bank will retain its temporary Extended Collateral Term Repo Facility providing funding against the widest range of collateral, and expand the collateral accepted in its facilities to include the drawn portions of corporate revolving credit facilities.

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