The market’s need for refinancing from the Bank depends on transactions between the Bank and all other participants, including the commercial banks and their customers. Following the transfer of responsibility for Exchequer cash management from the Bank to the Debt Management Office in April 2000, the market’s need for refinancing from the Bank is principally determined by the following three factors:
- the maturing stock of refinancing;
- changes in the note circulation;
- other movements across the Bank of England’s balance sheet.
Bank bills: comprise commercial bills which are payable in sterling and have been accepted by a bank whose bills are eligible for discount at the Bank of England.
Eligible bankers' acceptances (from 15/9/03): The eligible debt security (EDS) equivalents of bills of exchange issued into Crest by a bank on the Bank's current list of eligible banks; and which meet the other requirements for eligible bankers' acceptances as set out in the Bank's current notice on the requirements for eligible banks and eligible bankers' acceptances. An eligible debt security is defined in the Uncertificated Securities Regulations 2001, as amended. On 27 August 2003 the Bank announced that, subject to transition arrangements, it would no longer accept in its operations so called bank-on-bank bills (bills where both the issuer and acceptor are banks).
Local government bills: the Bank also buys outright and on repo eligible local government bills; such purchases are in practice rare.
Other sterling debt: comprises Treasury bills and bonds denominated in sterling issued by other central governments in the European Economic Area and the major international institutions.
Euro debt: comprises Bank of England euro bills and notes and bonds denominated in euro issued by central governments and central banks in the European Economic Area and the major international institutions, where they are eligible for use in ESCB monetary policy operations.
Interim reform: from 14 March 2005 the Bank stopped buying bills outright in its operations, and removed bankers’ acceptances from its list of eligible collateral.
3.30pm overnight repos: incurred an interest rate 100 basis points above the Bank's repo rate (25 basis points from March 2005).
3.30pm deposit facility:remunerated at 100 basis points below the Bank's repo rate (25 basis points from 14 March 2005).