Market Chatter: British Banks Increasingly Swapping Higher-Risk Collateral for Bank of England Cash

05:42 AM EDT, 09/02/2026 (MT Newswires) -- British banks pledged 1.9 billion pounds worth of the Bank of England's highest-risk collateral type at a weekly auction on Aug. 18 for six-month funds, the highest amount since March 2020, a Reuters review of BoE filings showed. A Reuters analysis of the BoE's Level C collateral list showed that the British central bank accepts a range of products in categories that the European Central Bank has disallowed as acceptable loan security, including products that package up and sell future payments on homeowners' mortgages, the news report said. A BoE spokesperson told Reuters that the Indexed Long-Term Repo was designed to allow firms to use a broad range of assets as collateral while allowing the BoE to protect itself through robust risk management. The spokesperson said the BoE continually reviews its framework to ensure that it remains consistent with its risk tolerance objectives. BoE did not immediately respond to a request for comment from MT Newswires. (Market Chatter news is derived from conversations with market professionals globally. This information is believed to be from reliable sources but may include rumor and speculation. Accuracy is not guaranteed.)