Why would the ECB sustain British banks’ LiFE?

March 25, 2019

One little detail in the recent Brexit turmoil has been overlooked: Invoking an agreement between six central banks from 2013, the Bank of England in March activated its bilateral liquidity swap line with the European Central Bank. This technicality means, that British banks from now onwards will be able to obtain Euros directly from the Old Lady of Threadneedle Street. Tellingly, the Bank of England calls this new measure “LiFE”: Liquidity Facility in Euros.

Why would the ECB sustain British banks’ LiFE?