Collateral risk management at the Bank of England

Quarterly Bulletin 2010 Q2
Published on 14 June 2010

By Sarah Breeden, Head of the Bank's Risk Management Division and Richard Whisker of the Risk Management Division.

In response to the financial crisis the Bank of England has expanded the range of collateral accepted in its market operations to include private sector assets, notably asset-backed securities and covered bonds. Such assets have different risk characteristics to the forms of collateral previously accepted, presenting new risk management challenges. This article sets out how the Bank of England undertakes collateral risk management, highlighting in particular the significant degree of protection taken by the Bank in its operations. 

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