ECB, BoE activate swap line ahead of Brexit

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ECB, BoE activate swap line ahead of Brexit
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The European Central Bank and the Bank of England activated a standing currency ...

FILE PHOTO: The logo of the European Central Bank is pictured outside its headquarters in Frankfurt, Germany, April 26, 2018. REUTERS/Kai Pfaffenbach

FRANKFURT - The European Central Bank and the Bank of England activated a standing currency swap line, the two said separately on Tuesday, stepping up their preparations for Britain’s possible departure from the EU later this month. Under the swap agreement, the Bank of England will offer to lend euro to UK banks on a weekly basis and the ECB will receive pound sterling from the Bank of England in exchange for euro.

“The activation marks a prudent and precautionary step by the Bank of England to provide additional flexibility in its provision of liquidity insurance, supporting the functioning of markets that serve households and businesses,” the ECB said in a statement. “As part of the same agreement, the Eurosystem would stand ready to lend pound sterling to euro area banks, if the need arises,” the ECB added.

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