LONDON, July 1 (Reuters) - Policymakers at the Bank of Englandhad differing views on the risks facing banks from a futureabrupt rise in global interest rates, minutes of their latestmeeting showed on Monday.
The BoE last month launched an investigation into thevulnerability of Britain's financial institutions and borrowersto higher interest rates as yields on government debt around theworld rose.
"There was a range of views on the possible systemicimportance of these risks," the minutes of the June 18 meetingof the BoE's Financial Policy Committee said.
Some members of the FPC said rates would rise based onimprovement in the economy and the committee should notdiscourage a shift into riskier assets.
Others worried that there could be a sharp reduction inmarket liquidity if rates rose and "there was potentially moreleverage in the system than it was possible to identifycurrently".
They also said there was a risk that non-bank counterpartiesproviding hedging to banks and non-bank financial sectors couldbe exposed to a jump in yields, the minutes said.
Global bond yields have jumped since U.S. Federal ReserveChairman Ben Bernanke said in June that the U.S. central bankmay start to scale back bond purchases later this year.