There was no take up of the Bank of England’s emergency funding scheme in the period it was open daily to lenders as UK banks weathered the storm following the collapse of Silicon Valley Bank (SVB) and Credit Suisse.
In coordination with other monetary authorities around the world, Threadneedle Street increased the frequency of its US dollar repo operations from weekly to daily on 20 March – the day after UBS bought Credit Suisse – in response to fears over the stability of the global banking system.
Repos, or repurchase agreements, are a form of short-term borrowing. Increasing the frequency of the repo auction to daily was designed to “enhance the provision of liquidity” around the world.
According to the Bank’s data however, no bids were made by UK lenders during the period auctions were conducted daily. This points to the relative health of the UK financial system when compared to some global peers.
The last allocation was made on 11 January, when $5m (£3.9m) was made available.
In a joint statement with other central banks last week, the Bank confirmed the scheme would revert back to its weekly timetable.
It said this reflected “the improvements in U.S. dollar funding conditions and the low demand at recent 7-day maturity U.S. dollar liquidity-providing operations.”
“The Bank continues to stand ready with other central banks to re-adjust the provision of US dollar liquidity as warranted by market conditions,” it said.
While fears over the financial sector have eased since mid-March, regulators have repeatedly questioned whether there needs to be tighter liquidity rules.
Authorities worry that the current regime no longer reflects the speed at which funds can be transferred in the age of digital banking. SVB collapsed after $42bn (£33bn) of funds were pulled in a single day, the largest bank run in history.
First Republic was snapped up by JP Morgan yesterday after it revealed depositors yanked out $100bn (£79.5bn) of cash from the firm in the first three months of this year.