Dow Jones| Nasdaq | S&P 500 | US Stock Market Today |Live Updates: Banks swap higher-risk credit assets for Bank of England cash in record surge
British commercial banks are increasingly pledging higher-risk “Level C” collateral, including securities backed by vehicle leases, high-interest credit cards, and buy-to-let mortgages, to access Bank of England cash through its Indexed Long-Term Repo facility. Pledges of these riskier assets reached £1.9 billion in a single weekly auction on August 18, the highest level since March 2020, bringing total Level C collateral on the central bank’s books to approximately £17.8 billion. The sharp increase reflects the unwinding of quantitative easing, which has prompted lenders to seek central bank liquidity using illiquid debt products. While former officials and analysts warn that accepting such assets could encourage risky lending, the Bank of England defended the facility, stating that its robust risk management, including higher interest charges and larger haircuts, protects it from potential credit losses.
