The Bank of England’s Special Liquidity Scheme

10 Pages Posted: 28 Mar 2012

See all articles by Sarah John

Sarah John

Bank of England

Matt Roberts-Sklar

Bank of England

Olaf Weeken

Bank of England - Monetary Analysis

Date Written: March 27, 2012

Abstract

The Bank of England introduced the Special Liquidity Scheme (SLS) in April 2008 to improve the liquidity position of the UK banking system. It did so by helping banks finance assets that had got stuck on their balance sheets following the closure of some asset-backed securities markets from 2007 onwards. The Scheme was, from the outset, intended as a temporary measure, to give banks time to strengthen their balance sheets and diversify their funding sources. The last of the SLS transactions expired in January 2012, at which point the SLS terminated. During the period in which the SLS was in operation, the Bank undertook a fundamental review of its framework for sterling market operations and developed a new set of facilities to provide ongoing liquidity insurance to the banking system. This article explains the design and operation of the SLS and describes how that experience has influenced the design of the Bank’s permanent liquidity insurance facilities.

Suggested Citation

John, Sarah and Roberts-Sklar, Matt and Weeken, Olaf, The Bank of England’s Special Liquidity Scheme (March 27, 2012). Bank of England Quarterly Bulletin 2012 Q1, Available at SSRN: https://ssrn.com/abstract=2029664

Sarah John (Contact Author)

Bank of England ( email )

Threadneedle Street
London, EC2R 8AH
United Kingdom

Matt Roberts-Sklar

Bank of England ( email )

Threadneedle Street
London, EC2R 8AH
United Kingdom

Olaf Weeken

Bank of England - Monetary Analysis ( email )

Threadneedle Street
London EC2R 8AH
United Kingdom

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