Bank of England to stop accepting bonds linked to coal for key loans
Summary
The Bank of England announced it will stop accepting bonds linked to thermal coal as collateral for loans to commercial banks starting in October. This move aims to reduce financial risks linked to coal, a highly polluting fossil fuel, and encourage a shift towards greener energy.Key Facts
- From October, the Bank of England will no longer accept thermal coal bonds as collateral for key loans.
- Thermal coal is burned in power plants and is one of the most polluting forms of energy.
- Commercial banks like Barclays, Lloyds, NatWest, and HSBC borrow money from the central bank using bonds as guarantees.
- The Bank sees coal-linked bonds as risky because their value might drop due to the move towards net zero emissions.
- About 150 big financial companies already limit their involvement with the coal industry.
- The Bank’s policy is stricter than most other western central banks, including the European Central Bank.
- The announcement was made quietly in early June without much public attention.
- Activists want the policy to cover more than coal, including other harmful fossil fuels and deforestation.
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