Bank of England urges for 'urgent' global action following UK pension near-collapse

In response to the near-collapse of UK pension funds, the Bank of England has asked the rest of the world to act "urgently."

After having to save U.K. pension funds in September, the Bank of England asked regulators around the world to take "urgent action" on non-bank financial institutions on Tuesday.

When the central bank stepped into the market for long-term bonds, a number of pension funds were just hours away from failing. It happened after a series of big changes in the interest rates on U.K. government debt showed weaknesses in liability-driven investment (LDI) funds, which are held by U.K. pension schemes.

In its most recent report on financial stability, which was released on Tuesday, the Bank said that if it hadn't taken action, "the stress would have had a big effect on the ability of households and businesses to get credit."

Its short-term emergency bond-buying programme gave LDI funds time to improve their liquidity and make sure the country's finances were stable.

The bank said, "There is a need for urgent international action to reduce risks in non-bank finance." This means that regulators in all countries need to work together to make the sector more stable.

The central bank said it will start an "exploratory scenario exercise" that will focus on financial institutions that are not banks. The goal is to learn more about the risks and find ways to reduce them.

The bank came to the conclusion that there are a number of things that need to be done to make this sector more resilient.

"This includes the need for regulatory action to make sure that LDI funds keep their higher levels of resilience." "There have already been some steps taken, and more work will be done next year."