As part of the monetary policy framework introduced by the Chancellor of the Exchequer in 1997, the Bank holds its own foreign exchange reserves in support of its monetary policy objective. These reserves are separate from the UK's official reserves, which the Bank manages on behalf of HM Treasury.
As set out in the Chancellor of the Exchequer's letter of 6 May 1997 to the Governor of the Bank of England, the Bank can intervene in support of its monetary policy objective using the Bank's own resources rather than those of the EEA.
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Documentation for the Bank of England bond issued in 2013
On 15 December 2006 the Bank of England announced that its foreign exchange reserves will be financed by issuing medium-term securities on an annual basis, with a regular timetable, a high degree of transparency and a group of banks to market and distribute each issue.
Click for further information on the Bank's balance sheet.
In addition to managing the MPC's reserves, the Bank also conducts wholesale foreign currency transactions for a small number of its customers.