Bank of England unveils plan to strengthen bank liquidity in crises

Tuesday 17 March 2026 - 12:45

The Bank of England has introduced new proposals aimed at improving how banks manage liquidity during periods of financial stress.

The plan focuses on enabling financial institutions to quickly convert their liquid assets into cash during fast-moving crisis situations. Rather than requiring banks to hold larger reserves, the initiative emphasizes making existing liquidity more accessible and usable when it is most needed.

The proposals were put forward by the central bank’s regulatory division, the Prudential Regulation Authority, which oversees the safety and soundness of financial institutions in the United Kingdom.

According to Sam Woods, chief executive of the authority, the reforms are informed by recent global banking disruptions, including the collapses of Silicon Valley Bank and Credit Suisse in 2023.

“These proposals are designed to ensure that banks can effectively use their liquidity buffers in times of stress,” Woods indicated in a statement, highlighting the importance of preparedness in an increasingly volatile financial environment.

The move reflects broader efforts by regulators worldwide to reinforce financial stability and prevent systemic risks. By improving the usability of liquid assets, the Bank of England aims to strengthen the resilience of the banking system without imposing additional burdens on institutions.