Document Type

Case Study

Case Series

Market Support Programs

JEL Codes

G01, G28


The global outbreak of COVID-19 spurred investors to sell the British gilt in a synchronized fashion, which caused dysfunction in primary and secondary gilt markets. Yield spreads spiked, and primary dealers temporarily stepped back from dealing in gilts during a trading session on March 19, 2020. Liquidity premia were also high in non-gilt, fixed-income markets. That same day, the Bank of England (BoE) announced GBP 200 billion (USD 234 billion) of asset purchases through the Asset Purchase Facility (APF) to preserve liquidity in both gilt and corporate bond markets as part of larger efforts to prevent an undesirable tightening of financial and monetary conditions. Through the Bank of England Asset Purchase Facility Fund Limited, BoE officials conducted reverse auctions to purchase gilts and investment-grade corporate bonds from primary dealers in these markets. The BoE established the APF in January 2009, as part of emergency actions meant to maintain the functioning of corporate credit markets during the Global Financial Crisis and achieve monetary policy goals; the BoE's Monetary Policy Committee (MPC) expanded the size of the APF several times over the ensuing decade. The MPC voted to expand the APF twice after March 2020, by GBP 100 billion in June 2020 and GBP 150 billion in November 2020. Early assessments by individual BoE officials suggest that the initial intervention worked, but explanatory research is still in the early phases. During the COVID-19 crisis expansions to the APF, the BoE was criticized for its appearance of monetary financing and substandard communications of the justification and intent of the asset purchases.

Date Revised