Bank of England Accepts Record Amount of Higher-Risk Assets as Collateral

British banks are increasingly pledging higher-risk assets as collateral at the Bank of England's Indexed Long-Term Repo (ILTR) facility, a Reuters review of BoE filings shows.

The £1.9 billion worth of Level C collateral pledged on August 18 is the most since March 2020 and three times as much as in the previous week. In total, about £17.8 billion of Level C collateral has been accepted by the BoE, up from £8.7 billion a year ago.

The growing use of the ILTR facility shows that Britain's central bank is exposed to higher-risk and potentially illiquid assets. The European Central Bank, in contrast, has tightened its criteria for acceptable collateral in recent years due to concerns about riskier securities.