BoE working paper on NBFI overnight bilateral liquidity to banks
Bank of England published a staff working paper analysing overnight bilateral liquidity provision from non-bank financial institutions to banks.
BoE research examines how NBFIs act as overnight liquidity providers to banks, highlighting interconnectedness risks. While research not policy, it signals supervisory focus on NBFI-bank funding channels and potential future macroprudential action.
NBFI-bank funding linkages are a growing systemic concern; supervisory attention may translate into liquidity or reporting requirements.
Action Required
Review NBFI counterparty concentration and overnight funding dependencies in liquidity risk frameworks.
Signals BoE analytical focus on NBFI liquidity channels, a known systemic vulnerability post-2022 gilt crisis.
Monitor overnight NBFI funding reliance and stress-test scenarios where NBFI liquidity withdraws. Update counterparty concentration metrics.
“Bank of England staff working paper on overnight bilateral liquidity provision by non-bank financial institutions to banks, setting out research in progress.”