Bank of England raises cash limit

The Bank of England has announced it is raising the limit on the amount of money individual banks can keep within the central bank.

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The move, which came into play last week, is designed to give banks greater scope to meet their liquidity needs on any given day.

Despite the BoE insisting confidence and risk appetite will soon return to the market, the move has been seen as a cautionary measure to keep banks less restricted in case any more volatility enters the market.

The BoE has raised its reserves target ceiling for banks to £2.5bn or 5 per cent of sterling-eligible liabilities, whichever is higher. Previously, the ceiling was £1bn, or 2 per cent.

In a statement, the BoE said: "The Bank will set the reserves target ceiling for each reserves scheme member as the higher of £2.5bn and 5 per cent of its sterling-eligible liabilities as calculated for cash ratio deposit purposes, rounded up to the nearest £10m."

It added: "We have taken this decision in view of the increase in the reserves targets set by reserves scheme members in recent months, and the potential for increase in future months."



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