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April 9, 2020, 2:34 a.m. EDT

UK Treasury to use Bank of England for financing

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By Jason Douglas

The U.K. Treasury said Thursday that it plans to use the Bank of England as a temporary source of financing during any market disruptions due to the new coronavirus.

The Treasury's so-called ways and means facility at the central bank acts like an overdraft, and was last used to significant extent during the financial crisis more than a decade ago.

The British government's planned use of the facility may fuel a belief among some economists and investors that the scale of the economic crisis triggered by the novel coronavirus may require governments to abandon a long-held taboo on tapping their central banks for cash.

The U.K. Treasury said its main source of financing will continue to be borrowing in financial markets and the BOE facility will only be used to provide cash in moments of market stress. Any drawings will be repaid by the end of the year.

Write to Jason Douglas at jason.douglas@wsj.com

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