Bank of England Money Markets Committee Flags Deposit Competition Pressure and Explores Extended RTGS and CHAPS Settlement Hours
The Bank of England's Money Markets Committee (MMC) met on 25 September 2026, with minutes published on 13 October 2026, revealing a broadly stable but watched UK funding environment alongside substantive discussion of two emerging structural issues. On market conditions, members reported that UK money markets continued to function smoothly, with ample liquidity and limited signs of stress, even during a period of increased bond market volatility. Cross-currency funding conditions remained stable, and quarter-end and year-end conditions were expected to be orderly. However, members flagged increasing competition for retail and corporate deposits, noting that sustained competition could raise wholesale funding requirements and costs over time. Some members also noted emerging funding pressures further out the euro curve as Eurosystem (the eurozone's central banking system) liquidity continued to decline, alongside growing use of European Commercial Paper (ECP) markets as an alternative funding channel. The committee discussed the Financial Policy Committee's proposed changes to the leverage ratio framework (which governs the maximum amount of debt a bank can hold relative to its equity), generally welcoming the direction but cautioning that leverage requirements are one of several constraints on activity, including stress-testing assumptions, investor expectations and risk-weighted capital requirements, making it difficult to predict whether the proposals would materially increase balance sheet deployment in UK money markets. A substantive agenda item covered plans to extend (Real Time Gross Settlement, the Bank's interbank payment system) and (Clearing House Automated Payment System) settlement hours, following feedback to a May 2026 consultation paper that broadly supported extending existing operating days before adding new ones. Key practical challenges raised included liquidity facility availability outside current hours, collateral management over weekends and bank holidays, value-date rollover conventions, and additional operational demands on smaller firms.