Bank of England Excludes Thermal Coal Bonds from Collateral Eligibility

The Bank of England has quietly updated its Sterling Monetary Framework (SMF) collateral eligibility criteria to exclude bonds issued by companies deriving revenue from thermal coal mining.

This policy change, published in June 2026 without a formal press conference or announcement, takes effect in October 2026 and applies specifically to thermal coal, the form of coal burned primarily for electricity generation.

The exclusion is part of a broader shift by central banks to treat transition risk, tied directly to how fast economies move away from fossil fuels, as a balance sheet problem rather than just an ideological one.

The Bank's decision reflects a growing body of evidence suggesting that thermal coal faces an irreversible demand trajectory, with renewable electricity generation costs continuing to fall and carbon pricing mechanisms maturing in multiple jurisdictions.