Bank of England announces additional measures to support market functioning – reaction

by | Oct 10, 2022

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Bank of England

This morning, the Bank of England has announced a series of additional measures to support the government bond market, including the launch of a Temporary Expanded Collateral Repo Facility.

But what do financial services professionals make of today’s announcement?

Below we share just some of the views that are coming through:  

Samuel Mather-Holgate of Swindon-based advisory firm, Mather & Murray Financial: “It’s frankly staggering that the financial services industry hasn’t learnt its lesson from the 2008 Global Financial Crisis when it packaged up debt and used a combination of derivatives to sell risky assets as safe investments. This, in essence, is what the pension schemes have done. Using derivatives to leverage returns on government debt supercharges the risk involved beyond that of any regular asset class. The FCA and PRA look to have been asleep at the wheel once again.”

Wes Wilkes, CEO at wealth managers IronMarket: “Lance Corporal Jones’ famous quote, “Don’t Panic Mr Mainwaring”, springs to mind. The Bank of England is essentially telling everyone to calm down whilst trying to mask its own panic. The messaging is needed, namely to shore up pension funds and convince them that Threadneedle Street has their back. But you have to ask why the Bank has been put in this position in the first place.”

Adam Walkom, Co-founder at London-based Permanent Wealth Partners: “The law of unintented consequences should be required reading at the Bank of England, but unfortunately they’ve neglected to do their homework. Who would have thought raising interest rates so much so quickly could have dire repercussions? The answer is virtually everyone it seems, except those on Threadneedle Street. This should give serious pause for thought for the Bank of England during their next Monetary Policy discussion.”

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