Chancellor of the Exchequer (): The independent Monetary
Policy Committee (MPC) of the Bank of England (the Bank) decided
at its meeting ending on 3 February 2022 to reduce the stocks of
UK government bonds and sterling non-financial investment-grade
corporate bonds held in the Asset Purchase Facility (APF) by
ceasing to reinvest maturing securities. The Bank ceased
reinvestment of assets in this portfolio in February 2022 and
commenced sales of corporate bonds on 28 September 2022, and
sales of gilts acquired for monetary policy purposes on 1
November 2022. The sales of corporate bonds ceased on 6 June
2023, with a small number of outstanding corporate bonds reaching
maturity on 5 April 2024. Therefore, the APF is now comprised
solely of gilts. On 17 September 2026 the MPC announced it will
unwind the APF through an annual sales pace of £20bn in purchase
proceeds terms until gilts held for monetary policy purposes are
fully unwound by the end of 2034. Taking the maturity profile
into account, this is equivalent to an average annual stock
reduction of £46bn. In addition, £120bn of the longest dated
gilts in purchase proceeds terms will be held to maturity by the
Bank for the purposes of indirectly backing current and future
banknote issuance.
The Chancellor at the time agreed a joint approach with the
Governor of the Bank of England in an exchange of letters on 3
February 2022 to reduce the maximum authorised size of the APF
for asset purchases every six months, as the size of APF holdings
reduces.
Since 5 May 2026 when the maximum authorised size of the APF was
last reduced, the total stock of assets held by the APF has
fallen further from £524.9 billion to £482.4 billion. In line
with the approach agreed with the Governor, the authorised
maximum total size of the APF has therefore been reduced to
£482.4 billion, comprising entirely of gilts, of which £362.4bn
is authorised to be held for monetary policy purposes and £120bn
is authorised to be held for the purposes of indirectly backing
current future banknote issuance.
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, the APF and
its directors from any losses arising out of, or in connection
with, the facility. Provision for any payment due under the
liability will continue to be sought through the normal supply
procedure.
