In January 2009, the Chancellor of the Exchequer authorised the Bank to set up an Asset Purchase Facility (APF) to buy high-quality assets financed by the issue of Treasury bills and the DMO’s cash management operations. The aim of the Facility was to improve liquidity in credit markets. The Chancellor also announced that the APF provided an additional tool that the Monetary Policy Committee (MPC) could use for monetary policy purposes. When the APF is used for monetary policy purposes, purchases of assets are financed by the creation of central bank reserves. More information can be found in the Red Book:
Red Book - Quantitative Easing
On 4 August 2016 the MPC voted to increase the stock of purchases of UK government bonds by the APF to £435bn. In addition, the MPC voted to make up to £10bn of purchases of corporate bonds over 18 months. It also voted to introduce the Term Funding Scheme, to reinforce the transmission of Bank Rate cuts to those interest rates actually faced by householders and business by providing term funding to banks at rates close to Bank Rate.
APF transactions are undertaken by a subsidiary company of the Bank of England – the Bank of England Asset Purchase Facility Fund Limited (BEAPFF). BEAPFF borrows from the Bank to pay for the assets it purchases (under the Gilts and Corporate Bond Purchases Schemes) and the loans it makes under the Term Funding Scheme. This loan to BEAPFF appears on the Bank's balance sheet as an asset. The corresponding liability is the increase in central bank reserves which have been created to fund the loan to BEAPFF.
The table in the document below summarises the operations currently undertaken by the Bank, including some of the operational parameters:
Summary of current Bank of England's operations in the sterling money markets
Schedule of operations
The table below outlines the dates that APF operations will normally take place. The Bank reserves the right to change the dates or frequency of these operations in light of bank holidays or developments in market conditions.
|Corporate Bond Purchases
||Corporate Bond Purchase operations will commence on 27 September 2016. Operations will take place on Tuesdays, Wednesdays and Fridays between 11:00 and 11:45, or as set out in the Market Notice here.|
||Gilt purchase operations take place between 2.15pm and 2.45pm on operation dates. For operation dates, please see the latest Market Notice here.|
|Term Funding Scheme
||The drawdown window opened on 19 September 2016.|