The Bank of England (BOE) is launching a new liquidity facility in euros in the final few weeks before the scheduled date for Britain to leave the European Union (EU).
The bank said Tuesday that the weekly auctions from March 13 are a “prudent and precautionary step” to allow U.K. lenders to access euro funding. The bank already offers dollar auctions on a similar basis.
Although the prospects seem to be fading for a no-deal Brexit on March 29, the BOE's Financial Policy Committee (FPC) said “significant market volatility” is to be expected in this scenario. Still, the central bank reiterated that the core banking system is strong enough to continue functioning properly and wouldn't amplify the disruption.
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