Bank of England Crisis Management Measures Attempt to Confront the Digital Age

Bank of England’s Phil Evans gave a speech on 17 March 2026 outlining PRA’s Consultation Paper CP5/26. The paper proposes changes so banks can turn their existing liquidity assets into cash fast enough to deal with a digital bank run, using BoE facilities as part of normal liquidity planning rather than treating them as off limits.

This is an acknowledgement that the old framework was built for a slower world. The PRA pointed out that digital banking and payments can accelerate liquidity stress in ways the existing regime did not fully anticipate. Problems in the US banking sector in March 2023 and the collapse of SVB etc, provided the wake-up call.

The LCR (Liquidity Coverage Ratio:– the amount of liquid assets a financial institution must have on hand to ensure they can meet short term obligations) was built around a 30-day stress horizon. The lesson from 2023 was that severe outflows can happen in days, even hours. Silicon Valley Bank saw deposit outflows equivalent to 85% of total deposits over two days. That changes the regulatory question. The issue is no longer just the size of the buffer. It is the speed in which it can be deployed.

The PRA wants firms to test monetisation risk properly, remove the exemption for Level 1 assets such as sovereign bonds from monetisation testing and measure whether they can actually sell, repo or pledge assets quickly enough under pressure. Sovereign bonds and HQLA ratios (high quality liquid assets) look comforting until  a bank’s treasury has to raise cash into a stressed market, with wider haircuts, trapped collateral and internal governance slowing execution.

.The PRA proposes to clarify that drawings from facilities available on published terms can be included in liquidity planning and internal stress testing, provided firms are operationally ready to use them. That fits with the Bank’s shift to a demand-driven, repo-led framework for supplying reserves.

Central bank liquidity should be part of the standard operating procedure, not the last resort. Liquidity that cannot be mobilised at speed is not a buffer.

The Fed has been exploring a requirement for larger banks to maintain readily available liquidity through reserves and pre-positioned discount-window collateral and Michael Barr has stressed that the use of the discount window should be seen as appropriate in both normal and stressed conditions. The ECB also chimed in, saying banks should treat Eurosystem refinancing operations as an integral part of day-to-day liquidity management.

BoE is also running Project Meridian Securities, which investigates how the real time gross settlement (RTGS) system could connect to tokenised securities platforms. PRA’s consultation paper says banks must be able to mobilise collateral and liquidity quickly in stress, Project Meridian Securities explores the plumbing that could make that faster and cleaner in practice.

The project’s stated goals included atomic settlement (Instantaneous) for central bank  money, automated liquidity management for repos and cross-platform settlement to reduce fragmentation.

All sounds great, but how will the operation departments of the banks handle this immediacy? How prepared are global financial systems for this Brave New Digital World?