Nick Butt, head of the Bank of England's (BoE) Future Balance Sheet Unit, on Tuesday set out details on the central bank's new tool for providing liquidity to non-banks. He said the tool will initially focus on the gilt market, insurers, pension funds, and liability-driven investment funds (collectively ICPFs). The official added that these institutions will directly interact with the BoE but they will not have access to the central bank's reserve account.
Butt also revealed that the BoE is carefully considering whether to apply a minimum standard of credit risk for firms to access the tool.
In addition, he said that the facility will be priced to be effective in periods of stress, but expensive in normal times.