The BoE will offer to lend US dollar funds overnight against eligible collateral, under the form of a daily auction.
Initially the bank will offer $40bn of dollar funds in each auction. In the future the amount of dollar funds available will depend on how effective these overnight funding operations have been.
The move from the BoE is part of a collaborated effort across the Bank of Canada, the European Central Bank, the Federal Reserve, the Bank of Japan, and the Swiss National Bank to address the pressures on the US dollar short-term funding markets.
In a statement, the BoE says: “These measures, together with other actions taken in the last few days by individual central banks, are designed to improve the liquidity conditions in global financial markets.
“The central banks will continue to work together closely and will take appropriate steps to address the ongoing pressures.”