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The United Kingdom's Commercial Paper Facility (U.K. GFC)

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Abstract

In January 2009, following continued increases in commercial paper spreads, Her Majesty's Treasury authorized the Bank of England to begin purchasing commercial paper under the Asset Purchase Facility (APF) in order to maintain UK-based corporations' access to short-term financing. Under the Commercial Paper Facility (CPF), the Bank purchased commercial paper from both primary issuers and secondary holders at a rate that was favorable to issuers during the credit crunch but that would no longer be attractive once the markets recovered. By serving as a backstop, or market maker of last resort (MMLR), the Bank helped to restore liquidity to corporate credit markets. By February 2010, almost all issuers could find more favorable spreads in the market, and in November 2010, the Bank gave 12 months' notice of the facility's withdrawal. At peak utilization, the Bank purchased GBP2.4 billion of commercial paper in late April 2009.

Suggested Citation

  • Simon, Claire, 2020. "The United Kingdom's Commercial Paper Facility (U.K. GFC)," Journal of Financial Crises, Yale Program on Financial Stability (YPFS), vol. 2(3), pages 459-473, April.
    • Handle: RePEc:ysm:ypfsfc:232020
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    References listed on IDEAS

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    1. Brett W. Fawley & Christopher J. Neely, 2013. "Four stories of quantitative easing," Review, Federal Reserve Bank of St. Louis, issue Jan, pages 51-88.
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    More about this item

    Keywords

    commercial paper; Bank of England; liquidity;
    All these keywords.

    JEL classification:

    • G01 - Financial Economics - - General - - - Financial Crises
    • G28 - Financial Economics - - Financial Institutions and Services - - - Government Policy and Regulation

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