The Bank of England Money Markets Committee (MMC) met in September 2026 to review market conditions, policy updates, and infrastructure developments. The Chair confirmed that recent usage of the Bank’s market-wide repo facilities aligns with the intended transition to a repo-led operating framework. Members noted that sterling money markets continued to function smoothly with stable funding conditions and ample liquidity, despite increased bond market volatility and geopolitical tensions. While some members highlighted potential risks from outright asset market volatility transmitting into funding conditions, the overall assessment remained robust. Emerging pressures were noted further out the euro curve as Eurosystem liquidity declined, alongside increased issuance activity in European Commercial Paper markets.
The committee discussed the Monetary Policy Committee’s September decision on Quantitative Tightening (QT), including the exchange of letters between the Governor and the Chancellor regarding QT and the Asset Purchase Facility (APF). Members also reviewed proposed changes to the leverage ratio framework by the Financial Policy Committee. While generally welcoming the direction, members considered it difficult to predict near-term material increases in leverage or balance-sheet deployment due to other constraints such as stress-testing assumptions and risk-weighted capital requirements. Additionally, increasing competition for retail and corporate deposits was noted, which could potentially raise wholesale funding requirements and costs over time.
Regarding market infrastructure, strong trading activity was reported across gilt and international markets with no material change in cleared repo conditions. An update was provided on plans to extend RTGS and CHAPS settlement hours toward near 24x7 operation. Feedback on the May 2026 Consultation Paper was broadly supportive, favoring an extension of existing operating days before adding new ones. However, members raised practical concerns about liquidity facility availability outside current hours, collateral management over weekends, and operational resilience, particularly for smaller firms. Discussions also covered value-date rollover implications and ongoing industry engagement on Euroclear UK & International's proposed MiniCREST contingency arrangement for cyber-attack scenarios.
The MMC minutes reveal a central bank balancing structural modernization with immediate stability concerns. The explicit confirmation that repo facility usage supports the transition to a repo-led framework signals a deliberate shift in how liquidity is managed, moving away from traditional reserve-based models. This transition appears to be proceeding without disrupting current market functioning, as evidenced by the report of ample liquidity and stable funding conditions despite external volatility. The committee’s cautious stance on the leverage ratio proposals suggests that regulatory adjustments are being calibrated carefully to avoid unintended shocks to balance-sheet deployment, indicating a preference for gradual implementation over rapid structural change.
From an Operational Risk perspective, the discussion on extending RTGS and CHAPS settlement hours highlights significant friction points in achieving near 24x7 operations. While the strategic direction is supported, the detailed concerns regarding weekend collateral management, liquidity buffers, and operational resilience—especially for smaller entities—underscore that technical and logistical hurdles remain substantial. The focus on these practicalities rather than just high-level policy goals indicates that the Bank recognizes the complexity of altering fundamental settlement infrastructures. The upcoming December review of the MiniCREST cyber-contingency plan further emphasizes that operational continuity in extreme scenarios is becoming a critical component of the broader financial stability agenda.
