(Bloomberg) -- The Bank of England is seeking information from U.K. financial institutions on their ability to implement negative interest rates without damaging their business.
The BOE and the Prudential Regulation Authority are conducting a survey as part of their analysis of the policy. While the BOE has said it isn't currently planning to cut interest rates below zero, it's preparing in case such a move ever becomes necessary.
The BOE's benchmark rate is currently at 0.1%, and Governor Andrew Bailey has noted that there may be harmful side effects from going lower. He said last month that the central bank is just doing “groundwork” on the issue.
“A negative policy rate could have wider implications for your firm's business and your customers,” PRA chief Sam Woods said in the letter. “The Bank and PRA will consider the wider business implications, including on financial stability, safety and soundness of authorized firms and pass-through to the wider economy.”
Read more: Negative Rates Get Another Look in a Covid-19 World: QuickTake
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