The Bank of England is set to create a permanent lending facility for non-bank financial institutions such as insurers and pension funds during times of stress, its markets boss Andrew Hauser said on Thursday.
In a speech Hauser outlined the need to “urgently” plug gaps in the central bank’s current toolkit, which has traditionally been geared towards lending money only to banks, who then lend on to other financial institutions.
Hauser said recent events had shown that banks could not “stabilise the financial system as a whole” during times of crises, alluding to the markets turmoil triggered by the pandemic in 2020 and the 2022 gilts crisis sparked by Liz Truss’s “mini” Budget.
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