FT: BoE tightens bank liquidity buffers before Brexit

The Bank of England has told some UK lenders to triple their holdings of easy-to-sell assets in the run-up to Brexit to cope with the market meltdown forecast if the UK crashes out of the EU without a deal later this month.

Some lenders must now hold enough liquid assets to withstand a severe stress — when banks stop lending to each other — of 100 days rather than the normal 30, under rules brought in late last year by the BoE’s Prudential Regulation Authority, according to people familiar with the situation.

Banks are also being forced to model their balance sheets on the assumption that they will not be able to swap sterling for dollars, on the basis that some were shut out of being able to exchange currencies for several days during the financial crisis.

The full article is available at https://www.ft.com/content/7450737a-4356-11e9-b168-96a37d002cd3

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