The Bank of England announced new measures on Monday to ensure financial stability in British markets, which had been destabilized by a vast package of budgetary measures from the new government of Liz Truss.
On September 28, the monetary institute had launched a program to buy back long-term Treasury bills of up to 65 billion pounds launched to calm this market which risked a liquidity crisis and threatened to spread to credit conditions for households and businesses in the country.
Before the expiry of this program on Friday, the monetary institute says it is ready to increase the size of its redemptions up to 10 billion pounds daily against a maximum of 5 billion previously.
The Bank of England (BoE) has so far only redeemed £5 billion of bond redemptions.
It also reveals several other actions, such as temporary redemptions of collateral, to ensure liquidity in the market for funds derived from long-term Treasury bills.
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The bank’s actions targeted in particular long-dated British Treasury bill derivatives (LDI) funds, some of which were at risk of bankruptcy due to a sudden collapse in the value of long-dated Treasury bills, combined with a surge in interest rates. state loan.
LDI funds showed substantial signs of improvement last week, the Bank of England points out, and the new measures are aimed at ensuring an orderly end to the securities buyback program which ends on Friday.
The new government of Liz Truss had frightened the financial markets by presenting on September 23 a mini-budget consisting of a vast support for electricity bills combined with significant tax cuts, without these measures being fully quantified or financed.