logo
Bank of England will aim for 'ample' reserves in UK financial system, official says

Bank of England will aim for 'ample' reserves in UK financial system, official says

Reuters16-07-2025
LONDON, July 16 (Reuters) - The Bank of England is aiming for Britain's financial system to have an "ample" level of reserves rather than a scarcity or the current surplus as it unwinds its past asset purchases, senior official Nathanael Benjamin said on Wednesday.
Benjamin, the BoE's executive director for financial stability strategy and risk, said that banks with access to BoE liquidity facilities would have incentives not to hoard reserves and to ensure that they spread through the financial system.
"If we get the calibration of incentives right across our monetary operating framework and regulatory frameworks, reserves should be neither scarce nor abundant - just ample," he said at an event hosted by the OMFIF central banking think tank.
The BoE is currently unwinding its past quantitative easing asset prices at a pace of 100 billion pounds ($134 billion) a year - although some investors think this will slow over the next 12 months - and COVID-era liquidity provided to banks is expiring.
As a result, banks will need to make increasing use of the BoE's weekly auctions of 7-day and 6-month funds, which they can access in exchange for high-quality collateral such as British government bonds and certain loans.
Benjamin said banks needed to ensure they had sufficient suitable assets to use as collateral both in good times and bad.
"It is important that they ... maintain enough 'dry powder' to source additional reserves from us in stress and also consider what collateral they have available to source liquidity from private-sector funding markets," he said.
The growing role of financial firms other than banks in British lending markets also made it important to create incentives so that banks with direct access to BoE liquidity facilities lent funds to other firms, Benjamin added.
To achieve this, the BoE wanted to ensure that banks "would also have incentives not to hoard excess and unneeded liquidity, and would instead redistribute it to the rest of the system where it might be more needed."
($1 = 0.7472 pounds)
Orange background

Try Our AI Features

Explore what Daily8 AI can do for you:

Comments

No comments yet...

Related Articles

Allianz Life says 'majority' of customers' personal data stolen in cyberattack, TechCrunch reports
Allianz Life says 'majority' of customers' personal data stolen in cyberattack, TechCrunch reports

Reuters

time2 hours ago

  • Reuters

Allianz Life says 'majority' of customers' personal data stolen in cyberattack, TechCrunch reports

July 26 (Reuters) - U.S. insurance giant Allianz Life said that hackers stole the personal information of the "majority" of its customers, financial professionals, and employees during a mid-July data breach, TechCrunch reported on Saturday. The report, citing a filing with Maine's attorney general, did not immediately provide the number of customers affected. Reuters could not immediately verify the report.

Robot brickies that can work around clock to be trialled in Britain as 25,000 more workers needed to meet housing plans
Robot brickies that can work around clock to be trialled in Britain as 25,000 more workers needed to meet housing plans

Scottish Sun

time3 hours ago

  • Scottish Sun

Robot brickies that can work around clock to be trialled in Britain as 25,000 more workers needed to meet housing plans

ROBOT brickies that can work around the clock are to be trialled in Britain - amid a chronic shortage of construction workers. This is despite unemployment being at a four-year high across the country. 3 The robot brickies could help solve Britain's chronic worker shortage 3 They can be programmed to work around the clock 3 Experts say the UK needs around 25,000 more brickies to meet housing demand Credit: Getty The machines, developed by Dutch firm Monumental, use a pair of mechanical arms that dispense mortar and lay bricks at a similar rate to human workers, reports the Daily Telegraph. Per eight-hour shift, each robot would be able to lay around 500 bricks - though they can be programmed to work 24/7. They can build straight line brick walls and some cornering, though they always need to be supervised by human eyes. One person can oversee two robots at once, but they don't need to be a qualified bricklayer. Britain is currently experiencing an unprecedented shortage of real brickies, with a report by report by the Home Builders Federation and the Construction Industry Training Board warning at least 25,000 more are needed to meet the Government's housing plans. The same company's machines have already built facades for scores of houses as well as canal walls on housing estates. London bricklaying contractor Galostar - which worked on the Olympic Stadium in Stratford and Sadler's Wells Theatre - is set to trial the technology. It's understood the scheme will begin next month, with the focus on whether the robots can be deployed on scaffolding and meet British building standards. Galostar boss Tony Chapman said: 'We don't think they [the machines] will ever completely replace brickies, but they can certainly help with the skills shortages we are dealing with. 'From our point of view it also helps because the robots don't need breaks, they don't take time off, and so if you have several of them you will know exactly what your output is going to be.' Monumental co-founder Salar al Khafaji said: "Your labour pool will now be much bigger, and you can work multiple shifts." He estimates the charge will be around £1 for every brick layed. The robots open the potential for more elaborate brickwork not seen since the Victorian era in the UK due to how labour-intensive it is. 'Today, if you want to ask for a very nice, patterned facade with two brick colours, you'll get an outrageously expensive quote, because it's quite hard and it will slow the masons down,' Mr al Khafaji added. UNEMPLOYMENT CRISIS It comes after official figures show the numbers on company pay rolls fell by 25,000 in May on the back of 41,000 just last month. But the unemployment rate edged up from 4.6 per cent to 4.7 per cent, according to figures from the Office of National Statistics. Average earnings growth, not including bonuses, slowed to five per cent in the three months to May, its lowest level for almost three years. Lord Matthew Elliott, of the Jobs Foundation, said Chancellor Rachel Reeves "must deliver a pro-growth, pro-jobs plan in the Autumn Budget'. Shadow Business Secretary Andrew Griffith said that unemployment 'is the only thing growing under Labour'. There will now be mounting pressure on the Bank of England to cut interest rates early next month to help kick-start the sluggish economy. Business are also braced for the new workers' rights package that is going through Parliament that will only add to firms' costs. Government estimates say that business will be hit for a staggering £5 billion as a result of the package that includes day one workers rights and a boost for trade union powers. Do you know more? Email

Governor Bailey is wrong: We should embrace the digital pound
Governor Bailey is wrong: We should embrace the digital pound

The Independent

time4 hours ago

  • The Independent

Governor Bailey is wrong: We should embrace the digital pound

Is the digital pound dead in the water? More than 100 countries are looking at the creation of their very own digital currencies. China already has one. The EU is developing a digital euro at pace. But the Bank of England? It seems to be tacking the opposite way to the rest of the world. Andrew Bailey told MPs on the Treasury Committee that he would need 'a lot of convincing' to greenlight a launch, which the Bank has already said couldn't happen until sometime in the 'second half of the current decade' anyway. Is this an opportunity missed? Even a case where the governor's conservatism threatens to leave Britons in the digital dark ages? First off, I should explain what the digital pound actually is. Digi-pounds (that's not the official name; I'm not sure we have one yet) would be currency issued by the Bank that could be stored in a digital wallet provided by a company like, say, Apple. This would allow you to pay for things directly, without the need for the card you currently have to have set up to use Apple Pay. People could also pay you by the same means. PS, Apple CEO Tim Cook isn't paying either me or The Independent for the mention. I'm using Apple Pay as an example because it's a service I use. Bailey is distinctly unimpressed with the idea of this new form of money. His preferred option is to help the market improve digital payment tech, which he said could deliver 'huge benefits'. Fraud reduction, lower costs, faster payments to SMEs, which at this point are probably saying chance would be a fine thing. "That's a sensible place to do it because that's where most of our money is," the governor opined. But here's an idea: why not simply do both? Is that really so hard? Or is the Bank yet again in 'can't do' mode? It is true that there are legitimate concerns about digital currencies. Sceptics worry about vulnerability to hacking. Fears have also been expressed about their making it easier to launder money, even to facilitate terrorist financing. Criminals took up Bitcoin with alacrity. Lately, they have favoured so-called ' stablecoins ', the value of which are linked to an underlying commodity or an existing currency such as the dollar. On the flip side, some critics have voiced fears about digital currencies being used to facilitate government snooping. This has been a big concern with the Chinese version given the obsessive interest in what its citizens do, say and even think of that country's government. But every new technology comes with pluses and minuses. It would be better for Bailey to accept that and roll with the punches. Bitcoin and its ilk already have a legion of fans in this country. If people like the concept of central bank issued digital currencies, there would theoretically be nothing to stop them from using digital euros if and when they arrive. There are already outlets in London that accept the paper equivalent (and dollars and yen while we're at it). Here's a potential selling point for your business: 'We accept the digital euros!' Right now, the central bank looks flat-footed, a very obvious laggard, largely thanks to the conservatism of the governor. I suspect some of Bailey's caution can be tracked back to his time at the head of the Financial Conduct Authority, a fairly thankless, if well remunerated, task at the best of times. Its CEO tends to get the blame for everything and the credit for nothing. Launching a new form of money is bound to create challenges and it will once again be Bailey's head on the block if something goes wrong. There have lately have been suggestions that the Bank could cease or at least shelve the work it has been doing on a digital pound. That would be a mistake. Digital currencies are coming. The Bank should accept that and prepare for the future. The governor badly needs to pull his legs out of the mud in which they're stuck.

DOWNLOAD THE APP

Get Started Now: Download the App

Ready to dive into a world of global content with local flavor? Download Daily8 app today from your preferred app store and start exploring.
app-storeplay-store