LONDON Policymakers at the Bank of England had differing views on the risks facing banks from a future abrupt rise in global interest rates, minutes of their latest meeting showed on Monday.
The Bank last month launched an investigation into the vulnerability of Britain's financial institutions and borrowers to higher interest rates as yields on government debt around the world rose.
"There was a range of views on the possible systemic importance of these risks," the minutes of the June 18 meeting of the BoE's Financial Policy Committee said.
Some members of the FPC said rates would rise based on improvement in the economy and the committee should not discourage a shift into riskier assets.
Others worried that there could be a sharp reduction in market liquidity if rates rose and "there was potentially more leverage in the system than it was possible to identify currently".
They also said there was a risk that non-bank counterparties providing hedging to banks and non-bank financial sectors could be exposed to a jump in yields, the minutes said.
Global bond yields have jumped since U.S. Federal Reserve Chairman Ben Bernanke said in June that the U.S. central bank may start to scale back bond purchases later this year.