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UK: Bank of England questions banks over negative rates

The Bank of England has written to UK banks asking them how ready they are if interest rates were cut to zero or turned negative.

The UK would be following countries such as Japan and Switzerland if it cut borrowing costs to such a low figure.

“We are requesting specific information about your firm’s current readiness,” the bank’s deputy governor, Sam Woods, said in the letter to banks.

The Bank of England cut rates to the current historic low of 0.1% in March.

Mr Woods said he wanted to know if the banks would face technological challenges if rates should turn negative.

“We are also seeking to understand whether there may be potential for short-term solutions or workarounds, as well as permanent systems changes,” he said.

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