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Home > News and Publications > Sources of the Bank of England’s M3 estimates aggregates
 

Sources of the Bank of England’s M3 estimates aggregates

Subject/Request details: Sources of the Bank of England’s M3 estimates aggregates

Date Released:
15 April 2011
 
Disclosure:  The information below was provided in answer to the following questions:
 
‘I am trying to determine A) the specific UK deposit balance or other money supply components, B) related definitions, and C) related sources of the BOE's M3 Estimate aggregate (maybe from those shown in the M4 component and related tables?).  Can you detail or point me in the right direction; In particular, I am looking for the components of...
 
Overnight deposits
 
Deposits with agreed maturity of less than or equal to 2 years
 
Deposits redeemable at notice up to 3 months
 
Repurchase agreements’
 
The Bank of England (‘the Bank’) publishes a table in which an estimate of M3 for the UK is available in terms of levels, flows and growth rates (Bankstats Table A2.3).  This table also shows how M3 can be broken down into the components that you make specific reference to.  Furthermore, the Bank publishes a set of explanatory notes which accompany this table, and these give details of the sources used to compile the data as well as more information about the definitions of the data.  These are available at: http://www.bankofengland.co.uk/mfsd/iadb/notesiadb/m3.htm.
 
’In a Deposit Redeemable at Notice account in the UK, is that notice period generally (or always) enforced by depository institutions, or do those institutions generally (or always) allow immediate redemption.  And if they allow immediate redemption is it generally (or always) with a penalty to the depositor.  What I'm trying to get at is this - are these deposits more like US small time depos, that have a maturity but can generally be redeemed with a penalty or are they more akin to US savings accounts, that while legally subject to a 30 day notice (w/o penalty), its a notice that is NEVER enforced.’
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Reporting institutions’ allocation of business to the time deposits line is driven by definitions provided by the Bank.  These definitions relate to the reporting of the balance sheet form, Form BT, on which time deposits are an item, and are available at: http://www.bankofengland.co.uk/statistics/Pages/reporters/defs/default.aspx.
 
I have, however, replicated below the definition that specifically relates to time deposits for information:
  • All deposits not classified as sight deposits should be treated as time deposits.  Therefore, a deposit for which only part of the balance is accessible without penalty, either on demand or by close of business on the day following that on which the deposit was made, should be classified as a time deposit.  Similarly, if a customer has placed money at call with an agreement not to access before a certain date, or to call at a specific number of days notice, these funds should also be classed as time deposits.  Postal deposit accounts should be classified as time deposits, unless there are alternative instant access arrangements, such as the option of using ATMs or transferring funds instantly to a sight account e.g. by telephone or Internet.  This is because the postal element will result in a delay in the customer receiving the funds, even if the reporting institution responds to the request by return post.


Although this may not specifically address all the elements of your second question, you may be able to get further information from the British Bankers’ Association (‘BBA’) about how different notice bank accounts are administered and run by banks in the UK.  You can contact them at:

British Bankers' Association – BBA
Pinners Hall
105-108 Old Broad Street
London
EC2N 1EX

Tel: 020 7216 8800
Fax: 020 7216 8811
E-mail:
bba@bba.org.uk
Website:
http://www.bba.org.uk

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