The Bank of England on Tuesday urged regulators to take “immediate international action” against non-bank financial institutions after it was forced to bail out UK pension funds in September, Reuters reported.

A number of pension funds were hours away from collapse when Britain’s central bank intervened in the long-term bond market.

The crisis came after a series of sweeping interest rate changes on UK government debt exposed the vulnerability of liability-based investment (LDI) funds held by UK pension funds.

In its latest financial stability report, published on Tuesday, the central bank said that had it not taken action, “the stress would have had a significant impact on the ability of households and businesses to access credit”.

Its temporary emergency bond-buying program gave LDI funds time to strengthen their liquidity positions and ensure the country’s financial stability.

The bank stressed the need for regulators in all jurisdictions to strengthen the resilience of the sector, saying “urgent international action is needed to reduce risks in non-bank financing”.

The central bank said it would launch a “case study” focused on non-bank financial institutions to better understand and mitigate the risks involved.

“The sustainability of this sector needs to be improved in several ways to make it stronger. This includes the need for regulatory measures to ensure that LDI funds maintain a higher level of sustainability. Several steps have already been taken, and next year we will continue to work,” the bank concluded.

Source: news.ro