London – 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,” said the bank’s deputy governor, Sam Woods, in a letter to banks.
The Bank of England cut rates to the current historic low of 0.1% in March.
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.
The past few years have been marked by outages and other problems with the computer systems of various British banks.
Last year, MPs condemned the level of IT failures at banks, warning that financial levies on firms and more regulation may be needed.
