FT: Time for the UK policy makers to wake up and tackle the crisis

With no private counterparty considered trustworthy for unsecured transactions, and with the private tripartite repo markets also drying up because of lack of confidence in the ‘intermediaries’ that act as counterparties for both legs of a tripartite repo market transaction, it is time for the Bank of England to take up the role of universal counterparty in tripartite repo transactions between private entities, and indeed also in the unsecured interbank market. The Bank of England must become the interbank market. Indemnification of the Bank of England by the Treasury for any credit-risk related losses incurred as a result of its universal counterparty role will, of course, be necessary.