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Home > Statistics > Explanatory Notes - Currency breakdown
 

Explanatory Notes - Currency breakdown

The currency analysis of both the UK central government's and Bank of England’s foreign currency assets and liabilities are published on a quarterly basis with a two month lag.

UK central Government’s assets and liabilities are broken down into US dollars, euro, yen, other currencies, SDRs, IMF reserve tranche and Gold.

The assets and liabilities of the Bank of England are broken down into US dollars, euro, yen, other currencies, and Gold

The euro category includes any assets still denominated in the legacy currencies of the euro area countries (Deutschemarks, French Francs etc).

The currencies of EU countries that are not currently participating in European Monetary Union are included in the Other currencies column.

Valuation

The assets and liabilities are converted into US dollars at end-period market exchange rates and end-period market prices.

UK foreign currency debt

Initial presentation: 1974-1999

These series are valued differently from the official reserves; non US dollar components are translated into US dollars at the closing market exchange rates on the last working day of each period to which figures relate.

IMF consists of net drawings from the IMF, less other countries' net purchase of sterling, but excluding transactions which affect the UK reserve position in the IMF.

HMG short and medium-term debt covers notes, bonds and bills. It comprises: bonds denominated in US dollars, Deutsche Marks, Swiss francs and yen and sold to official holders of sterling in April 1977; an issue in New York in 1978 of $350 million of HM Government 7 and 15 years' bonds; issues of $2,500 million, $4,000 million and $2,000 million floating-rate notes in 1985, 1986 and 1996 respectively; from October 1988, ECU Treasury bills, the bills being short-term instruments with a maturity of between one and six months (the final bill was redeemed in September 1999); net drawings from UK banks and non-resident banks on two Eurodollar facilities of $2,500 million and $1,500 million; from February 1991 an ECU 2,500 million issue of HM Government ten year bonds; ECU 2,000mn of 3 year Treasury Notes were issued in 1992 and 1993, ECU 2,500mn in 1994 and ECU 2,000mn in 1995, 1996, 1997 and 1998; net drawing on a 3 year ECU 5,000 million (equivalent) Multi-Currency Revolving Credit Facility with a group of international banks announced on 3rd September 1992 (final repayment made in April 1994); an issue in October 1992 of DM 5,000 million of HM Government 5 year bonds; an issue in December 1992 of $3,000 million of HM Government 10 year bonds; an issue in July 1996 of $2,000 million of HM Government 5 year bonds; the proportion of other public sector debt assigned to HMG which had been drawn from UK banks and non-resident lenders (these assignments involve equal and offsetting reductions in other public sector borrowing under the Exchange Cover Scheme); and any drawings made under the very short term financing facility of the European Monetary System.

HMG long-term debt consists mainly of North American debt dating from the 1940s.

Other public sector borrowing is divided into two columns

Under the exchange cover scheme consists of net borrowing, primarily by UK public corporations and local government, under the 1969 and subsequent exchange cover schemes (ECS). It includes any debt still owed under the scheme by privatised public corporations at the time of privatisation, together with certain debts incurred under the scheme by British Nuclear Fuels plc and the Northern Ireland central government. Foreign currency borrowed through UK banks and from abroad, and the issue of foreign currency securities are included.

Uncovered borrowing comprises foreign currency borrowing by local government and public corporations outside the ECS undertaken before end-March 1981. External sterling borrowings are included up until 1979, when exchange controls were removed. Any debt still owed by a public corporation at the time of privatisation ceases to be a public liability at that point; thus a change in level does not reflect transactions only.

Other public sector commercial debt comprises debt drawn outside the ECS after March 1981. Borrowing of this type has been permitted since that date only for the purpose of meeting specific commercial needs for foreign currency; it thus falls outside the definition of official debt. The column includes financial leasing from non-residents and transactions with non-resident export credit agencies. Changes in the composition of the public sector arising from privatisation affect entries in this column.

July 1999 onwards:

The revised presentation reflects the adoption by the UK of the IMF/G10 Template on International Reserves and Liquidity. For further information see the IMF website.

UK central government and other public sector foreign currency debt comprises:

ECS and assigned debt

Net borrowing, primarily by UK local government, under the 1969 and subsequent exchange cover schemes (ECS). This includes foreign currency borrowed through UK banks and from abroad, the issue of foreign currency securities, and any debt owed under the scheme by privatised public corporations at the time of privatisation.

The proportion of other public sector debt assigned to HM Government drawn from UK banks and non-resident lenders (these assignments involve equal and offsetting reductions in other public sector borrowing under the Exchange Cover Scheme).

Outstanding ECS and assigned debt is included in the short-term loan and medium and long term loan columns.

Money market instruments

Since the Euro Treasury bill programme wound down (the last bill was redeemed in September 1999), UK Government has no outstanding liabilities relating to money market instruments.

Bonds and notes

This item comprises:

· An issue of $2,000 million floating-rate notes in October 1996 ;

· An issue in February 1991 of ECU 2,500 million issue of HM Government ten year bonds;

· From January 1992, quarterly issues of 3 year HM Government ECU/Euro Treasury Notes;

· An issue in December 1992 of $3,000 million of HM Government 10 year bonds;

· An issue in October 1996 of US$ 2,000 million of HM Government 5 year bonds.

· An issue in July 2003 of US$ 3,000 million of HM Government 5 year bonds.

Medium and long term loans

Consists of debt with a maturity of greater than one year: primarily North American debt dating from the 1940s and ECS and assigned debt.

Liability due to SDR allocation

This liability is related to the allocation of SDRs by the IMF. In the event of the winding up of the IMF SDR Department, or in other circumstances the UK could be obliged to repurchase SDRs to the extent of its allocation. It should be noted that the treatment of the allocation in the ONS publication the Pink Book is different. In the Pink Book the SDR allocation is shown as a memorandum item.

Other Liabilities

Comprises liabilities arising out of repurchase agreements, forward and swap positions and unsettled trades.

Valuation

UK central government and other public sector foreign currency debt is valued on the same basis as the UK International Reserves. The debt is marked to market using end-period market exchange rates.

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