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Home > News and Publications > Summary of Quarterly Bulletin 2010 Q4
 

Summary of Quarterly Bulletin 2010 Q4

13 December 2010

 

Each article is available as a separate pdf file; click on the appropriate title to access the relevant file. Alternatively you may download the complete issue .

Recent economic and financial developments
Markets and operations
This article reviews developments in sterling financial markets, including the Bank's official operations, since the 2010 Q3 Quarterly Bulletin up to 19 November 2010. The article also summarises market intelligence on selected topical issues relating to market functioning, examining the emergence of long-dated secured funding transactions by banks.
 

Research and analysis
Research work published by the Bank is intended to contribute to debate, and does not necessarily reflect the views of the Bank or of MPC members.

The history of the Quarterly Bulletin
By Richard Windram of the Bank's Inflation Report and Bulletin Division and John Footman, Secretary of the Bank.
This edition marks the 50th anniversary of the Quarterly Bulletin. Over the years, the Bulletin has been one of the main conduits through which the Bank has communicated its thinking to the wider public. This article reviews the history of the Bulletin — both its origins and its subsequent evolution — as well as examining some of the insights that can be gleaned from its pages on some of the key central banking issues of the time.

Index of articles 1960–2010
This subject index covers all articles published during the first 50 years of the Quarterly Bulletin (ie up to 2010 Q3).

The UK recession in context — what do three centuries of data tell us?
By Sally Hills and Ryland Thomas of the Bank's Monetary Assessment and Strategy Division and Nicholas Dimsdale of The Queen's College, Oxford.
The Quarterly Bulletin has a long tradition of using historical data to help analyse the latest developments in the UK economy. To mark the Bulletin's 50th anniversary, this article places the recent UK recession in a long-run historical context. It draws on the extensive literature on UK economic history and analyses a wide range of macroeconomic and financial data going back to the 18th century. The UK economy has undergone major structural change over this period but such historical comparisons can provide lessons for the current economic situation. 
Three centuries dataset

The Bank's money market framework
By Roger Clews, Chris Salmon and Olaf Weeken of the Bank's Sterling Markets Division.
The Bank of England implements the policy stance of the Monetary Policy Committee through its operations in the sterling money markets. It also uses these operations to reduce the costs of disruption to the liquidity and payment services supplied by banks. In order to ensure their continued effectiveness, it was necessary to adapt the framework for these operations in response to the significant changes to financial and monetary conditions that occurred during the recent financial crisis. This article describes how central banks can use their money market operations to implement monetary policy and provide liquidity support to banks and some of the issues that can arise when undertaking operations to achieve these two objectives. The article goes on to explain the Bank's choices about its own operating framework, including how its thinking has been influenced by the lessons learned during the financial crisis.

Managing the circulation of banknotes
By Helen Allen and Andrew Dent of the Bank's Notes Division.
Issuing banknotes is one of the Bank of England's best known and most recognisable functions. To maintain confidence in the physical currency, genuine notes must be available to meet public demand. This article explains how the note circulation is managed to maintain this confidence. The Bank's role in this has changed considerably over the past 50 years with technological innovations and as the involvement of the commercial sector has grown. The Bank's response to future developments will continue to be consistent with its objective of ensuring the availability of genuine notes of good quality in a balanced mix of denominations.

Understanding the weakness of bank lending
By Venetia Bell and Garry Young of the Bank's Monetary Assessment and Strategy Division.
The flow of new bank lending to UK households and businesses fell sharply following the start of the global financial crisis in mid-2007. That provoked an ongoing debate about the extent to which the sustained weakening of bank lending was caused by a fall in demand for credit, or a fall in supply. While it is difficult to disentangle the effects of shifts in credit demand and supply, this article finds evidence of a substantial and persistent tightening in credit supply conditions from mid-2007. But independently weaker credit demand — probably associated with the impact of the global financial crisis — is also likely to have contributed to the weakness in bank lending.

Evolution of the UK banking system
By Richard Davies and Peter Richardson of the Bank's Financial Institutions Division and Vaiva Katinaite and Mark Manning of the Bank's Prudential Policy Division.
The financial system provides three key services: payment services, intermediation between savers and borrowers, and insurance against risk. These services support the allocation of capital, and the production and exchange of goods and services, all of which are essential to a well-functioning economy. While the basic financial services are relatively timeless, the characteristics of the system providing them change continuously, in response to both economic and regulatory developments. This article tracks the evolution of a core component of the financial system in the United Kingdom, the banking sector, describing how technology has transformed the economics of banking, and how deregulation in the 1970s and 1980s freed banks to take advantage of new opportunities through globalisation and financial innovation. The result has been the emergence of large, functionally and geographically diverse banking groups. Post-crisis, public-policy attention has been focused on the costs of a banking sector dominated by large and complex institutions that are seen as too important to fail.

The financial position of British households:  evidence from the 2010 NMG Consulting survey
By Mette Nielsen of the Bank's Risk Assessment Division, Silvia Pezzini of the Bank's Monetary Assessment and Strategy Division, and Kate Reinold and Richard Williams of the Bank's Structural Economic Analysis Division.
The UK economy has begun to recover over the past year but households' financial positions remain under strain. Elevated unemployment, weak earnings growth and restricted credit availability still pose a problem for some households. But the low level of Bank Rate has continued to bear down on mortgage interest payments for some borrowers. This article examines evidence from the latest survey of households carried out for the Bank by NMG Consulting in late September, which shows how these and other changes have affected households' budgets and spending decisions. The burden of unsecured debt was higher than in the past and concerns about debt levels had increased, leading some to save more in order to reduce indebtedness. A special set of questions this year showed that households' awareness of the fiscal consolidation measures was quite high. They were concerned about the impact on their finances, although the majority had yet to take any action in response.
The raw survey data are available in Excel format (4.2MB).

Reports
The foreign exchange and over-the-counter interest rate derivatives markets in the United Kingdom (92k)
By Tristan Broderick of the Bank's Monetary and Financial Statistics Division and Chris Cox of the Bank's Foreign Exchange Division.
In April this year, the Bank of England conducted its usual three-yearly survey of turnover in the United Kingdom's foreign exchange and over-the-counter (OTC) interest rate derivatives markets. This forms part of the latest worldwide survey co-ordinated by the Bank for International Settlements (BIS). The results show that the value of foreign exchange activity in the United Kingdom rose by one quarter between April 2007 and April 2010, increasing the UK share of the global market to 37%. Turnover in OTC interest rate derivatives also rose considerably over the same period. This report sets out the results of the UK survey, and then considers the potential underlying drivers in these markets over the past three years.

Global finance after the crisis
By Alan M Taylor, Professor of Economics, University of California, Davis, Senior Advisor, Morgan Stanley and Houblon-Norman/George Fellow, Bank of England 2009/10.
This paper presents the text of the annual John Flemming Memorial Lecture, given at the Bank of England on 12 October 2010.

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