The Bank of England has called for urgent action to address a weak spot in the UK financial system as persistent worries about the global banking sector threaten to unleash fresh market turmoil.
The central bank said Wednesday that UK banks had enough financial resources to avoid shocks but the pensions regulator needed to move “as soon as possible” to increase the resilience of liability-driven investment funds.
These “LDI” funds, which many UK pension schemes invest in, proved particularly vulnerable when the British bond market came under enormous strain following then-Prime Minister Liz Truss’s disastrous budget six months ago. The Bank of England had to step in to avert a broader financial meltdown.
Source : Bank of England Urges Swift Action on Funds that Nearly Brought Down UK Financial System