Local authority swaps

Quarterly Bulletin 1991 Q2
Published on 01 June 1991

This paper forms part of the written evidence submitted by the Bank to the Treasury and Civil Service Committee in March 1991 and was published by the Committee in its report on the 1991 Budget on 25 April.

The Treasury and Civil Service Select Committee has asked the Bank to provide written evidence on a number of questions relating to local authority interest rate swaps (Mr Millar's letter of 19 February). This note seeks to describe local authorities' use of swaps within the context of the wider swaps market and outlines possible options identified by the Bank of England for bringing about a satisfactory resolution of the situation that has arisen.

Section 1 describes what a swap is, and gives an overview of the international swap market. Section 2 describes the involvement of local authorities in the sterling interest rate swaps market. Technical detail has deliberately been kept to a minimum for this paper, but a more detailed account of the instruments and workings of the markets can be found in the attached appendix. Finally, section 3 describes the role played by the Bank of England.

PDFLocal authority swaps


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