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UK banks tap emergency BoE funds for first time in two years
UK banks have borrowed a daily average of GBP3 million in emergency funds from the Bank of England in the month ending July 9, the first time in more than two years that institutions have used the facility, central bank data showed today.
The Bank's standing lending facility was last used in the period ending April 8, 2009, when banks borrowed a daily average of GBP43 million.
Banks must pay a premium to use the facility, with a rate of 0.75 percent to borrow funds, 25 basis points above official interest rates.
The Bank does not provide a breakdown of the number of banks that used the facility, or how much was borrowed at any one time.
The standing deposit facility - which enables banks to park their cash at the central bank - has not been used at all since the period ending March 4, 2009.
The Bank's standing facilities have two aims: firstly, to keep overnight market rates in line with the official Bank rate of 0.5 percent.
Secondly, the facility is also intended to help banks manage unexpected "frictional" payment shocks resulting from technical problems in banks' own systems or in the market-wide payments and settlements infrastructure, which prevent them from settling their books at the end of the day.
