Bank of England governor Mark Carney (pictured) called the move part of “normal contingency planning” as the UK prepared to leave the European Union next month.
He said he was introducing “a temporary amendment to its liquidity insurance facilities” which would mean banks could get access to funds on a weekly, rather than monthly, basis.
Indexed Long-Term Repos (ILTR) is the Bank of England’s regular market-wide sterling operation and forms part of its broader liquidity insurance framework. ILTRs allow banks to borrow central bank cash for a six-months in exchange for other, less liquid assets, including high-grade mortgages.
The measure came amid uncertainty about whether the UK will withdraw from the EU on the planned date. The prime minister still appeared to lack support to get her Brexit withdrawal bill through Parliament.
After cabinet MPs threatened to resign this week, and Labour gave its strongest signal yet that it would support a second referendum on Brexit, the likelihood of a delay has increased.
But the Bank of England said it was taking no chances on Tuesday when it announced the measures.
Carney said: “This change will apply from March and will run until the end of April. This is a prudent and precautionary step, consistent with the bank’s financial stability objective, to provide additional flexibility in the bank’s provision of liquidity insurance in the coming months.”
The news came on the same day as UK Finance reported a drop in mortgage lending in January, which some industry figures linked to the uncertainty around Brexit.