LONDON: The Bank of England said on Monday that it was looking at how to accept equities as collateral for its market operations, as well as enabling access for banks which operate in line with Islamic law. The BoE already accepts bonds, asset-backed securities and pools of 'raw' loans as collateral. Its executive director for markets, Chris Salmon, said accepting equities would be complex and take until at least next year.
Salmon said in a speech he will deliver to money market traders later on Monday that the BoE hoped to announce more on accepting Sharia-compliant collateral around the turn of the year.
Salmon also said the BoE expected to keep its current 'floor' system for controlling market interest rates when it started to raise its main rate, and that it was an open question whether it would return to the pre-crisis 'reserves averaging' method.
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