Definitions
From 24 May 2006, the new statements include detail on:
Notes in circulation outside the Bank and, in the balance sheets of the two Departments, other notes issued by Issue Department and held by Banking Department. The entry for 'Notes in Banking Department' does not reflect the value of physical notes held on Bank premises.
Reserve balances: current account balances held by commercial banks and building societies at the Bank. The Bank pays Bank Rate on reserve balances - a key part of the implementation of monetary policy. Reserve balances can be used by commercial banks to make payments and constitute a high quality liquid asset for them to hold. The sharp increase in reserves balances since March 2009 reflects the fact that asset purchases under the MPC's policy of Quantitative Easing have been financed by increasing reserves balances.
Standing facilities: amounts deposited in the Bank's standing deposit facility and lent (collateralised) in its standing lending facilities.
Open market operations: amounts lent in the Bank's one-week or longer-term reverse repo operations, and amounts lent or borrowed in fine-tuning operations.
Ways and Means advances to HM Government (to the National Loans Fund).
Foreign currency public securities issued by the Bank: including euro bills and euro notes and medium-term securities to finance the Bank's holdings of its own foreign currency reserves.
Cash ratio Deposits: non-interest bearing deposits placed with the Bank by certain banks and building societies under the provisions of the Bank of England Act 1998.
Bonds and other securities acquired via market transactions
Other assets: Since March 2009, the MPC has been using a newly set up subsidiary (the Bank of England Asset Purchase Facility Fund (BEAPFF)) to make purchases of assets in pursuit of its monetary policy aims. Whilst the accounts of the Fund are not consolidated with those of the Bank, the Fund is financed by loans from the Bank and those loans are included in other assets. The loans account for the majority of the increase in 'other assets' since March 2009.
The Bank's capital of £14.6 million, held by HM Treasury, is included within "other liabilities".
The following information relates to data provided for periods prior to 24 May 2006:
Issue Department - Assets
Government securities included UK government and government guaranteed securities, Treasury bills, and ways and means advances to the National Loans Fund. Before the Maastricht treaty became effective in 1994, it also included any special Treasury liability and the historic liability of the Treasury of £11 million (see page 56 of the Bank's 1971 Report and accounts), repayment of which on 27 July 1994 was financed by increased holdings of government securities. A special liability arose when, at the quarterly revaluation of the department's assets, the total market value was less than the note issue; in such circumstances the Treasury assumed a non interest bearing liability to the department to be written off in the course of the department's operations. Both before and after 24 May 2006, if the market value of assets is greater than the note issue, the excess is paid over to the Treasury.
Other securities included gilt and Treasury bill repurchase agreements (prior to 27 July 1994 these had been covered under Government securities), promissory notes relating to ECGD and shipbuilding acquired as part of money market smoothing operations, commercial bills and local government bills (both inclusive of repos), miscellaneous securities and, on occasion, local government deposits and bonds acquired in the course of market operations.
Banking Department - Liabilities
The total included the Bank's capital of £14.6 million, held by the Treasury, which was not included in any of the sub totals. Credit items in course of transmission were included in deposits, and debit items in course of collection were deducted.
Public deposits were balances held by the central government at the Bank, including the accounts of the Consolidated Fund, the National Loans Fund, the National Debt Commissioners and the Paymaster General, together with dividend accounts, accounts connected with tax collection and various other government funds. Deposits held by local government and public corporations were included under reserves and other accounts.
Bankers' deposits consisted of operational deposits held mainly by banks for clearing purposes, and non-operational cash ratio deposits for which institutions authorised under the Banking Act 1987 and deposit-taking UK branches of "European Authorised Institutions" were liable until 1 June 1998 under the arrangements for monetary control introduced in August 1981, and for which these institutions and those authorised under the Building Societies Act 1986 have been statutorily liable from 1 June 1998. The definition of institutions covered by the CRD scheme was updated in December 2001 to reflect the coming into force of the main provisions of the Financial Services and Markets Act 2000.
Reserves and other accounts included deposit liabilities to non-resident central banks, Bank of England Euro bills, Bank of England Euro notes, the dividend accounts of stocks managed by the Bank other than the direct obligations of the British government, local government and public corporation accounts, and some private sector accounts.
Banking Department - Assets
Government securities included government and government guaranteed securities, valued at cost adjusted for the amortisation of premiums or discounts on a straight line basis over the period to maturity, and Treasury bills.
Advances and other accounts included advances to the Bank's money market counterparties including the discount market, loans to customers and support loans to deposit taking institutions. Provisions for losses were deducted.
Premises, equipment and other securities included equipment (at cost less accumulated depreciation) and premises (valued professionally on the basis of an open market value for existing use). Other securities included ordinary shares, local government bills and bonds, and commercial bills. Both listed and unlisted securities were included at cost less provisions.
From April 1998, the Issue Department and the Banking Department together form the central bank sector. Prior to April 1998, the Issue Department was included in the central government sector, and Banking Department in the banking sector. The Exchange Equalisation Account, the government account which holds the government's official reserves of gold, convertible currencies and special drawing rights, does not form part of the Central Bank's balance sheet.
