Exclusive-Banks rush to swap higher-risk credit assets for Bank of England cash

British banks are increasingly using higher‑risk assets — think store‑card loans, vehicle leases, buy‑to‑let mortgage slices and risky credit‑card pools — as collateral at the Bank of England; Level C collateral has climbed to about £17.8bn, with a £1.9bn spike in one auction in mid‑August.
The BoE says its long‑term lending facility is meant to accept a wide range of assets and it protects itself with higher rates and bigger haircuts, while the ECB has moved the opposite direction by tightening collateral rules.
Critics warn this could encourage risky lending and leave the central bank exposed to illiquid, hard‑to‑sell assets — a sensitive topic given past crises and recent strains in private credit markets.