The Sterling Bond Portfolio

The Bank of England’s cash ratio deposits and free capital and reserves are invested through the Sterling Bond Portfolio.


The Sterling Bond Portfolio is an investment portfolio. Income earned on Sterling Bond Portfolio investments is used to pay for the costs of the Bank of England’s monetary policy and financial stability functions, and to grow the Bank of England’s capital base. The Sterling Bond Portfolio is funded by Cash Ratio Deposits and the Bank of England’s Free Capital and Reserves.

How the Sterling Bond Portfolio is invested

The Bank of England invests the Sterling Bond Portfolio in high quality sterling assets. Cash Ratio Deposits are only invested in gilts. The Bank’s Free Capital and Reserves are invested in gilts and certain highly rated supranational bonds.  

Gilt investments funded by Cash Ratio Deposits are made broadly in line with the profile of the outstanding stock of gilts, as well as taking into account the profile of the Bank of England existing holdings. We do not purchase in ultra-short bonds (bonds with a maturity of less than three years). We do not currently purchase gilts with a residual maturity of over 22 years, and this is kept under review annually.

Gilt investments funded by Free Capital and Reserves are generally made in the same way as gilt investments funded by Cash Ratio Deposits, although the maturity profile of purchases may vary in order to adhere to the Bank’s internal risk limits.

The transactions we carry out to invest cash ratio deposits and the Bank’s Free Capital and Reserves are separate from the purchases of sterling bonds that we make for monetary policy purposes through the Asset Purchase Facility.

Announcing Sterling Bond Portfolio Purchases

We provide transparency regarding Sterling Bond Portfolio purchases. Before we make transactions, we announce the intended, aggregate amount to be invested. We also announce how much we intend to purchase of gilts and supranational bonds. We regularly publish this information, usually quarterly.

Two weeks after we have completed the previously announced transactions, we provide information about the stock of assets and the most recent purchases. For gilts, we provide information about the stock, and purchases made in the most recent quarter, both broken down by maturity bucket. We publish the total amount accounted for by supranational bonds. And we also provide information about how much of the portfolio is made up by Cash Ratio Deposits. 

These announcements will be made on the Bank’s wires pages.

The latest figures are provided below.

  Stock as at 31 December 2023 (£mn nominal) Net purchases* made between 1 October and 31 December 2023 (£mn proceeds)
Gilts 14,069 0       


4,441 0


4,843 0


3,332 0


1,453 0
SSAs 0 0
Total (Gilts + SSAs) 14,069 0
CRDs 12,290

* Negative numbers indicate net sales

Residual maturities for each sector are: Ultra-short <3 years, Short 3-7 years, Medium 7-15 years, Long >15 years. This is in line with the DMO’s definition. 

How the Bank calculates cash ratio deposits

Under the Cash Ratio Deposit scheme, deposit-taking financial institutions (i.e. banks and building societies) place non-interest bearing deposits at the Bank of England. We invest these deposits in gilts, and the income earned on these investments is used to fund the costs of the Bank of England’s monetary policy and financial stability operations. 

The size of the Cash Ratio Deposits placed with the Bank is indexed to gilt yields. This means that the ratio, and therefore the deposits the Bank of England receives from Cash Ratio Deposit payers, changes periodically depending on the level of past gilt yields. This helps deliver a stable income to cover the cost of the Bank of England undertaking its responsibilities.  

We calculate the representative yield every six months and publish this, alongside the underlying data used in the calculation, on our website on the 14 working day of that month (see below).  

The full methodology is set out in the below documentation.

HM Treasury - Review of the cash ratio deposit scheme: consultation on proposed changes

Cash ratio deposits calculation


This page was last updated 10 January 2024