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Interesting:

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Capital flows (very approximate)

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Full: https://www.aussiestockforums.com/threads/december-2024-ddd.38360/page-2#post-1308629

The Bank of England will hide the identities of any pension funds, insurers or hedge funds bailed out under a new financial stability tool to prevent a wider crisis engulfing the economy, Deputy Governor Dave Ramsden said. 

The BOE has accepted submissions by so-called “shadow banks” that “revealing too much information could create stigma” about using the bail-out tool, which would undermine any rescue effort and risk creating more financial instability, he said in a speech on Monday.

The “systems changes are now all in place” for the new Contingent NBFI Repo Facility (CNRF) but the launch has been delayed slightly until the start of 2025, Ramsden said. The facility will operate as a backstop to the gilt market, which sits at the heart of all UK financial markets given its size and interconnectedness. 

The decision to create the CNRF reflects changes to the structure of financial markets since the 2008 financial crisis. Until now, only regulated banks have had access to the BOE balance sheet – which comes with broad regulatory oversight. It also follows the market meltdown following the 2022 mini-budget when liability-driven investment funds desperately needed cash to meet margin calls.

The CNRF will only be used at times of extreme stress, and the tool may potentially be extended to hedge funds, Ramsden also indicated. 

‘’We are looking at the insurance companies, the life assurers, the LDI funds. That’s where we started. But it’s certainly not where we can stop,” he said in a question-and-answer session following the speech. “There’s going to be further phases as we open this out. We will be going further with the CNRF and, you know, watch this space for where we go beyond that.” 

The CNRF will be activated by the bank when “we judge that gilt market dysfunction is severe enough that it threatens financial stability absent any action, and our lending facilities to banks will not, on their own, eliminate that threat,” he said. 

So:

[URL unfurl="true"]https://ticdata.treasury.gov/resource-center/data-chart-center/tic/Documents/slt_table5.html[/URL]

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UST and UK Gilts are joined at the hip. The UK through Hedge Funds are buyers of UST (on massive leverage).

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You bail out both when you bail out Banks, Hedge Funds, Insurance Co's, Pension Funds, etc. So what you have is QE without actually calling it QE, because the Bank of England has access to the Fed's swap lines.

Will anybody actually care? Unlikely.

jog on

duc