News Release
Bank of England Operations in the Sterling Money Markets: Eligible Securities for Repo Operations
21 July 1999
The Bank of England today announced a major extension to the securities it will accept in its daily repo operations. From 31 August 1999, the securities it will accept will be extended to include a range of securities denominated in euro issued by the central governments and central banks of the countries in the European Economic Area (EEA) including the eleven countries participating in EMU.
This extension of securities accepted in the Bank's operations is a further step in the process first announced on
15 October last year. This latest step will increase the pool
of eligible securities by approximately £2 trillion. The
objective of the Bank's programme of extended collateral is
to assist the smooth conduct of its open market operations by
extending the range of eligible securities its counterparties
can use. This initiative, particularly the major extension announced
today, will also be of material assistance to market participants
in managing their liquidity over the coming millennium change
(Y2K) period.
These additional securities will also be eligible as sterling stock liquidity under the FSA sterling stock liquidity regime. This will allow banks more flexibility and choice in the instruments they hold for liquidity purposes.
The Bank will make a further announcement on the operational arrangements for the additional eligible securities in open market operations ahead of 31 August.
In addition, the Bank plans to provide same day payment against collateral delivered to the Bank's accounts in Euroclear and Cedel later this year. This will apply to all of the Bank's repo operations. Same day payment will be possible as a result of changes to these systems' settlement arrangements and will provide an improvement on existing arrangements under which collateral must be pre-deposited a day in advance.
Notes to Editors
Eligible collateral in open market operations
From 31 August, the Bank will accept securities denominated in euro issued by the central governments and central banks of the EEA countries, where they are eligible for use in ESCB monetary policy operations and where the relevant central bank of a country participating in EMU has agreed to act as the Bank's custodian under the Correspondent Central Banking Model (CCBM). The CCBM was set up by the EU member states to facilitate the cross-border use of collateral and is already used for ESCB and TARGET operations.
All the central banks of the eleven countries participating in EMU have agreed to act as the Bank's custodian. The Bank of England's counterparties in its sterling open market operations will therefore be able to deliver eligible securities to the central bank of each country where the settlement system into which the security was issued is located.
