Only massive central bank intervention thwarted the total collapse under Liz Truss
Britain was within hours of financial Armageddon after the decisions made by the country’s former prime minister, Liz Truss, BTV reports, referring to recent revelations from the head of the Bank of England.
In late September, his government unveiled a plan for massive tax cuts. The kingdom’s equity markets reacted extremely painfully to the program, with the pound falling to an all-time low almost equal to the dollar and the value of long-term government bonds leaping to levels not seen since the 2008 financial crisis.
“There was a time when major markets were very volatile. So was the government bond market, which in many ways is the most important of all, ”Bank of England Governor Andrew Bailey told Channel 4.
The critical situation has also affected pension funds, which are the main players in the government bond market.
“We were forced to act quickly and we had to do it decisively,” said the head of the regulator. Under Bailey’s leadership, the bank began actively buying government bonds and spent £ 19.3 billion.
“When we intervened, there was a huge collapse within hours. The threat to financial stability was real,” he added.
