A second-tier facility is also available, but at a penalty rate of 75 percentage points above the Bank rate against similar securities as collateral, but with outstanding maturities of between 91 days and three years. The Bank rate is, of course, changed from time to time to adapt to changes in underlying financial market conditions.
To make the system work effectively, the market must react with sensitivity to changes in underlying demand and supply conditions, and must also emit clear and comprehensible signals to the authorities.