Surging UK Bank Borrowing From BOE Adds to Liquidity Debate

UK banks borrowed a record amount of cash from the Bank of England’s weekly repo facility, part of an upward trend that analysts suggest is a sign of early liquidity strains in sterling money markets.

Financial institutions on Thursday tapped over £38 billion ($50 billion) from the central bank’s short-term repo facility, which provides cash in return for gilts pledged as collateral. That’s up from as little as £700 million at the start of the year.

BOE officials have repeatedly said the increased usage does not point to liquidity issues, and they are confident that reserves — the deposits ...