The encyclopedia · Finance & Accounting · Financial decision · 2020
The Bank of England pre-built a repo facility it could switch on overnight.
The CTRF was pre-built with set terms; on 24 March 2020 the Bank activated it — unlimited 3-month cash against broad collateral at Bank Rate +15bp.
Bank of England
The solution
Liquidity facilities invented during a panic arrive late and carry stigma; facilities that exist quietly beforehand can be switched on instantly. The Bank of England designed the Contingent Term Repo Facility (CTRF) as a 'contingent' part of its sterling framework, triggered only by the Bank.
On 24 March 2020, as Covid-19 disrupted markets, the Bank activated the CTRF. Operations on 26 March and 2 April offered unlimited 3-month reserves at a fixed price of Bank Rate + 15bp — a modest premium — with fixed-price full allotment and the full range of collateral, including loans.
Because terms were pre-announced and generous, banks could bid without negotiating or signalling distress; the facility ran alongside the Indexed Long-Term Repo and Discount Window and was kept in place until June 2020.
Why it worked
- Pre-announced terms remove negotiation time and stigma in a crisis.
- Unlimited size at a small premium signals confidence, not punishment.
- Broad collateral lets banks monetise loans, not just gilts.
What can be applied
If you will need a tool in a crisis, build and publish its terms in calm times — then activation is an administrative act, not a negotiation, and the market knows exactly what it is getting.
Aftermath
The CTRF stayed on the books as a standing contingent tool; the Bank later added a Contingent NBFI Repo Facility for insurers and pension funds after the 2022 gilt episode, using the same pre-built design.
Sources
- Bank of England launches Contingent Term Repo Facility
- Activation of the Contingent Term Repo Facility (CTRF) – Market Notice 24 March 2020
- Bank of England Market Operations Guide: Our tools
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