The British Bankers’ Association (BBA) has urged the Bank of England to lower its rate for emergency loans to banks during times of market turbulence. The Association recommended the bank should alleviate its penalty rate of 1 per cent above the base rate at such times.
Meanwhile, the BBA has also criticised the Tripartite system that regulates the financial system, claiming it should establish a clearer definition of the roles of the Treasury, the Financial Services Authority (FSA) and the Bank of England.
In addition, the BBA has called for the Treasury Committee’s review to focus on the early stages of the regulatory process, whilst also calling for an investigation into why the system for assessing banks’ liquidity didn’t alert regulators to the problems at Northern Rock, which is expected to have borrowed £30 billion in emergency loans in roughly ten weeks by the end of the year.
Northern Rock isn’t the only bank reported to be in need of emergency funding, with Barclays subject to widespread reports suggesting it has needed to borrow from the Bank of England.
Bank of England Urged to Cut Emergency Loan Rate
Bank of England Urged to Cut Emergency Loan Rate
Mon, 19 Nov 2007
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