The Bank of England announced activation of CTRF

The Bank of England on Tuesday announced the activation of an emergency liquidity measure in a Contingent Term Repo Facility, or, a CTRF, as it tries to smooth the functioning of money markets during the coronavirus crisis.

Key notes

• The BoE will hold CTRF operations on March 26 and April 2, with no limit on the amount of funds it can lend out.
• The CTRF is intended to be a more flexible form of liquidity measure than the BoE's regular repo operations that can be tailored to the needs of financial markets at a particular moment.

FX implications

The measures taken by banks can instil some temporary relief to markets, although until the cases of COVID-19 numbers decline on a worldwide scale, with no signs of reinfection, mutation and spread, uncertainty will weigh on the pound due to an economy on the brink of a depression and a long-long road to recovery. 

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