Written Statement by , Chancellor of the
Exchequer
The Monetary Policy Committee (MPC) of the Bank of England (“the
Bank”) decided at its meeting ending on 03 February 2022 to
reduce the stock of UK government bonds (gilts) and sterling
non-financial investment-grade corporate bonds held in the Asset
Purchase Facility (APF) by ceasing to reinvest maturing
securities.
On 28 September 2022, in line with the Bank’s financial stability
objective, the APF carried out purchases of long-dated gilts to
restore orderly market conditions. This was then expanded on 11
October to include index-linked gilts. As noted in the Written
Ministerial Statement of 12 October 2022[1] the authorised total
size of the APF was increased from £866 billion to £966 billion
at the time to allow for a time limited intervention.
Total gilt purchases under this financial stability operation
reached £19.3 billion when the daily auctions ended as planned on
14 October. I have therefore agreed to reduce the authorised
maximum size of the APF from £966 billion, as was agreed on 28
September 2022, to £886 billion. This reduction reflects the
unused portion of the recent £100 billion financial stability
related APF expansion.
The Governor and I will continue to jointly agree the authorised
maximum size of monetary policy related asset purchases every six
months, as the size of APF holdings reduce, to reflect the size
of the portfolio. This month a further reduction in the
authorised maximum size of the APF will be agreed in relation to
the ongoing unwind of assets acquired for monetary policy
purposes.
The risk control framework previously agreed with the Bank will
remain in place, and HM Treasury will continue to monitor risks
to public funds from the APF through regular risk oversight
meetings and enhanced information sharing with the Bank.
There will continue to be an opportunity for HM Treasury to
provide views to the MPC on the design of the schemes within the
APF, as they affect the Government’s broader economic objectives
and may pose risks to the Exchequer.
The Government will continue to indemnify the Bank, and the Bank
of England Asset Purchase Facility Fund (BEAPFF), from any losses
arising out of, or in connection with, the facility. If the
liability is called, provision for any payment will be sought
through the normal supply procedure.
A full departmental Minute has been laid in the House of Commons
providing more detail on this contingent liability.
[1] https://questions-statements.parliament.uk/written-statements/detail/2022-10-12/hcws319(opens
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Statement from
Treasury
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