BoE to aid banks as King warns of ‘exceptional market stress'

The Bank of England is to provide short-term sterling liquidity to the banking sector in anticipation of "market-wide stress of an exceptional nature" over the coming weeks.

Giving his annual Mansion House speech last night, Bank of England governor Mervyn King said the macroeconomic picture had weakened over the past month. He said the Bank was ready to provide extra measures of support to the financial sector and the real economy. King said the Bank is to activate the Extended Collateral Term Repo Facility announced last December, under which the Bank can hold auctions of sterling liquidity with a maturity of six months. "It is now time to activate [the] scheme, in the words of the Bank's Red Book, 'in response to actual or prospective market-wide stres...