LONDON (MNI) – The Bank of England will remain a lender of last
resort to “solvent” commercial banks, Monetary Policy Committee member
and BOE executive director Paul Fisher said in a speech Thursday.
Explaining the framework of the Bank’s new sterling liquidity
measures, Fisher said: “The central bank needs to stand ready as lender
of last resort.”
However, he noted that the liquidity should be provided against
short-term buffer shocks to support the wider economy and should only be
provided to “solvent” institutions.
“The Bank of England will only lend to those commercial banks that
are, in its judgment, solvent and viable,” he said.
Fisher noted however, that the Bank expected banks to provide their
own liquidity insurance, with some steps already made in that direction.
“We expect banks to self-insure for most of their liquidity needs –
and while there has been encouraging progress to date, more is needed on
that front,” he said.
— London Bureau (+20 7862 7499), ukeditorial@marketnews.
[TOPICS: MT$$$$,M$$BE$]