The Bank of England is to offer extra liquidity to U.K. banks in the weeks running up to the referendum on Britain’s membership of the European Union in an effort to pre-empt any shocks to financial markets around the time of the vote.
The U.K.’s central bank said it would offer three “additional Indexed Long-Term Repo operations” (ILTR) or a market wide auction of central bank reserves in the weeks around the EU referendum.
This means the BoE will offer to exchange less liquid bank assets for cash, without limitation, allowing banks a cash buffer for six months at cheaper rates.
The Bank already offers ILTR operations to banks and building societies every month, but the extra auctions means lenders will have access to billions of pounds of extra liquidity, with four auctions now taking place around the vote in June.
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