News Release
Bank of England Operations in the Sterling Money Markets: Eligible Securities for Repo Operations
15 October 1998
In its open market operations in the sterling money markets, the Bank of England is to extend the range of securities it will accept in its daily repo operations.
Progressively, over the next year, the Bank will add bonds denominated in sterling issued by other central governments in the European Economic Area (EEA) and the major international institutions; and bonds denominated in euro of these issuers, where they are eligible for use in ESCB monetary policy operations.
In making this change, the Bank's objective is to assist the smooth conduct of its open market operations by extending the range of eligible securities its counterparties can use in them, subject to the continuing requirement that these securities should be of prime credit quality and traded in liquid markets, and should be capable of regular use without placing undue operational burden on the Bank or its counterparties.
The additional sterling securities now to be added to the list are a natural extension within the present framework, and the addition of securities denominated in euro will help to ensure that the Bank's operations and those of its counterparties develop in parallel with the euro area.
Full details are set out in the attached notice.
Notes for Editors
- Through its open market operations in the sterling money markets the Bank of England implements monetary policy: repo operations to supply short-term sterling liquidity each day to the financial system are conducted at the Bank's repo rate, as determined by the Bank's Monetary Policy Committee.
- At present, the Bank accepts UK Government marketable sterling securities (gilts and Treasury bills), eligible UK local authority and bank bills, and UK Government marketable foreign currency securities in its daily repo operations.
- The European Economic Area (EEA) comprises the EU Member States (Austria, Belgium, Denmark, Ireland, Finland, France, Germany, Greece, Italy, Luxembourg, Netherlands, Portugal, Spain, Sweden, United Kingdom) together with Iceland, Liechtenstein and Norway.
- Details of the asset eligibility requirements for ESCB monetary policy operations are set out in the ECB's publication 'The Single Monetary Policy in Stage Three: General Documentation on ESCB Monetary Policy Instruments and Procedures', published in September of this year. Broadly, euro debt securities will be eligible where they are located in a securities depository in the euro area and the issuer is established in the EEA or an international institution, and deemed financially sound by the ECB.
- Domestic bonds are issued in local currency into national central securities depositories. In the UK market, domestic bonds are issued into the Bank of England's Central Gilts Office settlement system (CGO) or CREST and comprise UK Government sterling marketable debt (gilts), sterling debt securities of other UK issuers and sterling debt securities of overseas issuers (bulldogs). International bonds are issued in various currencies into the international market and typically held in the International Central Securities Depositories (Euroclear and Cedel).
- The international institutions whose paper the Bank proposes to take are listed in annex 1 to the attached notice.
