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United Kingdom: Extended-Collateral Long-Term Repo

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Abstract

In response to liquidity crunches in funding markets leading up to the Global Financial Crisis, the Bank of England introduced Extended-Collateral Long-Term Repo (ELTR) operations, which were a modified version of the regularly scheduled three-month open market operations. These operations were conducted by auction and accepted non-sovereign debt securities, including residential mortgage-backed securities, as collateral. The Bank of England routinely changed the frequency and size of the ELTRs in response to financial needs. At the peak, ELTRs occurred weekly with 40 billion British pounds (GBP) available for eligible institutions, and with GBP 180 billion outstanding. In order to drain this increased liquidity from the system, the Bank of England introduced the one-week bill, a non-monetary liability, which reached peak issuance in January 2009 at GBP 100 billion in a week. The Bank of England transitioned ELTR operations into permanent Indexed Long-Term Repo operations in June 2010, with several tweaks to auction design.

Suggested Citation

  • Fulmer, Sean, 2022. "United Kingdom: Extended-Collateral Long-Term Repo," Journal of Financial Crises, Yale Program on Financial Stability (YPFS), vol. 4(2), pages 1090-1107, April.
    • Handle: RePEc:ysm:ypfsfc:v:4:y:2022:i:2:p:1090-1107
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    File URL: https://elischolar.library.yale.edu/cgi/viewcontent.cgi?article=1339&context=journal-of-financial-crises
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    More about this item

    Keywords

    Bank of England; ELTR; ILTR; Sterling Monetary Framework; United Kingdom;
    All these keywords.

    JEL classification:

    • G01 - Financial Economics - - General - - - Financial Crises
    • G28 - Financial Economics - - Financial Institutions and Services - - - Government Policy and Regulation

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