The Bank of England’s active quantitative tightening has run for over four years and its balance sheet is approaching the “Preferred Minimum Range of Reserves” identified by Andrew Bailey in 2024. As gilt holdings shrink, commercial banks’ borrowing via BoE repo has surged to about £200bn.

Barclays’ Moyeen Islam warns that the weighted average maturity of these repo operations has fallen to roughly 36 days, creating faster liquidity tightening and crowding out private‑sector activity. He proposes a longer‑term (1‑year+) repo facility and moving the residual QE portfolio onto the BoE’s main balance sheet to provide a stable asset base.

The Prudential Regulation Authority is consulting on easing regulatory penalties for standard central‑bank drawings, but Islam argues short‑term funding markets will become choppy as reserve scarcity bites. Total BoE borrowing, including the remaining Term Funding Scheme, now stands near £245bn, a sizable share of the £365–£515bn PMRR estimate.

Deutsche Bank’s Sanjay Raja agrees that a structural bond portfolio would give a durable reserve source, reducing reliance on short‑term repos. The experience of the 2019 US repo spike and 2020 Treasury meltdown suggests caution in following the Fed’s overnight‑repo model.