Banks rush to swap higher-risk credit assets for Bank of England cash

British banks are increasingly pledging higher-risk assets such as loans linked to high-interest store cards and vehicle leases as collateral at the Bank of England, a Reuters review of BoE filings shows. 

Why it matters

Such transactions show the extent to which Britain’s central bank is exposed to higher-risk and potentially illiquid assets. The European Central Bank, meanwhile, has tightened its criteria for acceptable collateral in recent years, worried that a central bank stamp of approval increases demand for riskier securities that could be hard to sell in a crisis.