On 12th October 2020 The Bank of England (“BoE”) published a letter that it had sent to a selection of UK financial services firms. This letter requested feedback in relation to any possible operational implications that firms would encounter if the Bank of England’s Monetary Policy Committee (“MPC”) implemented a zero or negative policy rate. A copy of the letter is available here.
Although the BoE state that its engagement on this issues should not to be considered indicative of an imminent negative or zero policy rate being set by the MPC, Guernsey regulated firms should consider if and how they would be affected by the implementation of a such a rate. Firms should consider if there are any technical operational issues relating to entering zero or negative rates in their systems as well as if there are any contracts in place that would be materially affected by the change.