HM Treasury and Bank of England announce technical changes to selected foreign currency operations

HM Treasury and the Bank of England are today announcing that they expect to make some technical changes to the terms on which they transact with market counterparties in selected foreign currency operations.
Published on 21 June 2012

The changes will apply to over-the-counter derivatives transactions undertaken by the Bank both in relation to its own balance sheet and in its role as HM Treasury’s agent in the day-to-day management of the UK’s foreign exchange reserves. These transactions are undertaken to manage the financial impact of fluctuations in foreign exchange and interest rates. Under current agreements, the Bank takes collateral when the risk to the Bank or HM Treasury increases. Under the changes being announced today the Bank and HM Treasury intend also to provide collateral in the form of foreign currency securities to counterparties where the risk moves out of their favour.

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