MNI BRIEF: BOE Bailey Backs Lasting Non-Bank Liquidity Schemes

MNI (LONDON) - Bank of England Governor Andrew Bailey made the case for central banks to create permanent liquidity facilties for non-banks to reduce financial stability risks but he argued that the central bank should have control over when to trigger them, differentiating them from the standing facilities offered to banks. Bailey, in a speech at a Bloomberg event in Washington, made no comment on monetary policy. 

"Central banks should consider permanent emergency facilities for non-banks. But these should not be standing facilities ...the central bank can trigger or activate these facilities if it senses stressed conditions," he said, adding that the BOE is currently implementing such facilities for a range of non-banks which could pose systemic risks. 

Former BOE markets head Andrew Hauser talked about developing the central banks toolkit for non-bank financial institutions at an MNI event back in September 2023 and the BOE has been continuing with the programme, with Bailey spelling out its guiding principles.