(Bloomberg) -- Growing demand for cash saw use of the Bank of England’s liquidity program rise to a record this week, in a move that likely reflects the central bank shrinking its balance sheet rather than a recent market selloff.

Financial institutions tapped the BOE’s short-term repo (STR) facility, which provides cash in return for pledging gilts, for £51.4 billion ($63.2 billion) this week, according to a central bank notice on Thursday. 

The record borrowing comes amid volatile trading in gilts, which sold off sharply on Wednesday and at Thursday’s open. Still, Thursday’s increase in STR usage does not appear to reflect stress among lenders. Usage rose around £5 billion from last week, less than the previous increase, and follows a trend of growing demand last year.

Banks are relying more on repos for funding as the BOE shrinks its balance sheet after years of expansionary programs. Officials have welcomed the usage, though the central bank is in the process of sweetening the terms of a six-month repo tool that accepts a broader range of collateral in order to diversify usage of its facilities. 

The BOE is reversing its vast bond-buying stimulus since the financial crisis through a mix of actively selling bonds and stopping reinvestments when they reach their redemption dates. The aim is that these repos will wean markets off its bloated balance sheet by reducing the risk that banks cannot access funding when reserves drop too low.

This week has seen investors dumping UK assets, with long-term bond yields surging to the highest since 1998, the pound falling to more than a one-year low and domestic stocks under pressure.

--With assistance from James Hirai.

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