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The Bank of England’s Special Liquidity Scheme




The Bank of England introduced the Special Liquidity Scheme (SLS) in April 2008 to improve the liquidity position of the UK banking system. It did so by helping banks finance assets that had got stuck on their balance sheets following the closure of some asset-backed securities markets from 2007 onwards. The Scheme was, from the outset, intended as a temporary measure, to give banks time to strengthen their balance sheets and diversify their funding sources. The last of the SLS transactions expired in January 2012, at which point the SLS terminated. During the period in which the SLS was in operation, the Bank undertook a fundamental review of its framework for sterling market operations and developed a new set of facilities to provide ongoing liquidity insurance to the banking system. This article explains the design and operation of the SLS and describes how that experience has influenced the design of the Bank’s permanent liquidity insurance facilities.

Suggested Citation

  • John, Sarah & Roberts, Matt & Weeken, Olaf, 2012. "The Bank of England’s Special Liquidity Scheme," Bank of England Quarterly Bulletin, Bank of England, vol. 52(1), pages 57-66.
  • Handle: RePEc:boe:qbullt:0071

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    Cited by:

    1. David Cobham, 2012. "The past, present, and future of central banking," Oxford Review of Economic Policy, Oxford University Press, vol. 28(4), pages 729-749, WINTER.
    2. de Ramon, Sebastian & Francis, William & Milonas, Kristoffer, 2017. "An overview of the UK banking sector since the Basel Accord: insights from a new regulatory database," Bank of England working papers 652, Bank of England.
    3. Christopher Spencer, 2014. "Conventional and Unconventional Votes: A Tale of Three Monetary Policy Committees," Discussion Paper Series 2014_11, Department of Economics, Loughborough University, revised Dec 2014.
    4. Ian R. Gordon, 2016. "Quantitative easing of an international financial centre: how central London came so well out of the post-2007 crisis," Cambridge Journal of Regions, Economy and Society, Cambridge Political Economy Society, vol. 9(2), pages 335-353.
    5. Garreth Rule, 2015. "Understanding the central bank balance sheet," Handbooks, Centre for Central Banking Studies, Bank of England, edition 1, number 32.

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