The Bank of England (BoE) will lend Euros to UK banks on a weekly basis from 13 March, it was announced today.
The UK’s central bank revealed last week that it would give British banks access to liquidity on a weekly basis – as opposed to the usual monthly opportunity – as Britain prepares to leave the European Union.
Now it has confirmed that banks and building societies that are members of the Sterling Monetary Framework will be able to borrow in Euros from the Bank of England.
The BoE and the European Central Bank (ECB) have agreed an emergency currency swap line to keep foreign exchange markets operating after Brexit.
The Bank of England will offer to lend euros to UK banks on a weekly basis while the ECB will receive pound sterling from the Bank of England in exchange for euros.
As part of the same agreement, the Eurosystem, the monetary authority of the eurozone, would stand ready to lend pound sterling to euro area banks, if the need arises.
The BoE said: “The bank stands ready to provide liquidity in all major currencies.
“Today’s announcement is a prudent and precautionary step, consistent with the bank’s financial stability objective, to provide additional flexibility in the bank’s provision of liquidity insurance in coming weeks, supporting the functioning of markets that serve households and businesses.”
The ECB said it will continue to work with the Bank of England to monitor market conditions carefully.