We manage the UK’s official gold and foreign currency reserves on behalf of the Government. We also manage our Monetary Policy Committee’s smaller pool of foreign currency reserves, and carry out wholesale foreign currency transactions for government departments and a small number of their customers.
UK official gold and foreign currency reserves
The UK’s official holdings of international reserves are made up of:
- foreign currency assets
- International Monetary Fund (IMF) special drawing rights
- the UK’s Reserve Tranche Position (RTP) at the IMF.
These reserves (except the RTP) are held in a government account known as the Exchange Equalisation Account (EEA), which is administered by the Treasury. We act as the Treasury’s agent in the day-to-day management of the EEA, dealing in foreign exchange and investing the reserves within the framework of a service-level agreement set annually by the Treasury.
We also act as the Treasury’s agent for foreign currency liability management. This includes issuing foreign currency debt (bonds).
The Bank’s foreign currency reserves
We also have our own foreign currency reserves, separate to the Treasury’s reserves, which we can use to support our monetary policy objective. In December 2006 we announced that our 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.