Bank of England blames bank dealers for shrinking bond liquidity

Staff blog addresses growing concerns

The Bank of England's capital markets experts have blamed tighter bank regulation for shrinking liquidity in the bond market in their latest analysis.

In its new staff blog, the central bank focused on the issue of bond liquidity, which has been at the forefront of investors' concerns over the past few months. Recently, Bank of England governor Mark Carney issued his own warning to fund managers over declining liquidity and the risks this could pose if investors begin selling out of funds following a future rise in interest rates. Is Carney spooking markets unnecessarily over rate rise sell-off? The latest blog, written by the Bank's capital markets division, Yuliya Baranova, Louisa Chen and Nicholas Vause, suggests some of the is...