Bank of England Market Operations Guide

This is the Bank's published framework for market operations conducted in support of monetary and financial stability.


An introduction to the Bank of England Market Operations Guide


We are the United Kingdom’s central bank. Our mission is to promote the good of the people of the UK, by maintaining monetary and financial stability.

Parliament has given us statutory authority to pursue our mission.   

And our balance sheet – the assets we hold and the liabilities used to fund them – is one of our most important tools for delivering monetary and financial stability.

The way we use our balance sheet stems from our unique capacity to create central bank money. Some of that is in the form of sterling banknotes. But most of it is sterling central bank reserves. Reserves are deposits that eligible financial firms hold with us, and are the ultimate means of settlement for payments.

The Monetary Policy Committee meets its monetary stability objective by setting Bank Rate. This is the interest rate we apply to reserves. Bank Rate influences the interest rates charged and paid across the wider UK economy. We can also use central bank money to purchase assets and offer term lending.

Central bank money in the form of reserves also helps us meet our financial stability objective, by allowing us to provide the highest quality liquidity to the financial system, in good times and in bad. This liquidity helps firms to settle transactions in a timely manner, as well as self-insure against unexpected liquidity demands.  

This online guide explains in more detail how and why we operate in markets, and how our operations work in practice. In part one, we explain our objectives and how we achieve them. In part two we outline the facilities that are available to firms, and how they can be accessed.  

We hope that this guide is an aid to understanding and using our facilities. It continues the Bank’s long-standing practice of providing a high level of transparency around our market operations.

This website replaces our previous guide (known as the ‘Red Book’) with a more modular online approach. It also consolidates the Bank’s historic toolkit with more recent innovations, including the asset purchase programme, our term funding schemes, funding facilities in non-sterling currencies, and the Alternative Liquidity Facility.

Other facilities not included in this guide

Some of the Bank’s facilities fall outside the scope of this guide. In particular, it does not cover: 

  • Supplementary facilities for lending to firms in resolution, as set out in the Purple Book. This details how the Bank ensures that a firm in resolution will continue to have sufficient liquidity to meet its obligations.
  • Additional lending operations which may take place under the crisis management agreement.   
  • The management of the UK’s official foreign exchange reserves, which the Bank undertakes as agent on behalf of HM Treasury.
This page was last updated 30 January 2024