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Notification of a Contingent Liability

Treasury written statement – made on 18th March 2020.

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Photo of Rishi Sunak Rishi Sunak The Chancellor of the Exchequer

In my oral statement yesterday I announced a new credit easing scheme called the Covid-19 Corporate Financing Facility (CCFF), which is expected to become operational in the week commencing 23 March 2020. This scheme will be run by the Bank of England (The Bank) on behalf of HM Treasury. HM Treasury are extending a full indemnity for the CCFF, which will create a new contingent liability for the Government equal to the potential losses of the Facility.

The CCFF will be a credit easing scheme targeted at easing the disruption to cash flows of companies following Covid-19. The scheme will focus on purchasing newly issued Commercial Paper from eligible companies, which are non-financial companies that make a material contribution to the UK economy and are rated investment grade. The CCFF is unlimited in size.

HM Treasury will monitor risks to public funds from the Facility through regular meetings with the Bank. The Bank will manage the Facility in accordance with a stringent risk control framework agreement between HM Treasury and the Bank, which will be similar to existing frameworks such as that of the Asset Purchase Facility (APF).

A departmental Minute has been laid in the House of Commons providing more detail on this contingent liability.

This statement has also been made in the House of Lords: HLWS164