Central Banks
UK to Reduce Cash Buffer Against Losses From Bond-Buying Program
- Move provides taxpayers better value for money, officials say
- Bailey, Reeves agree to policy shift in exchange of letters
The Bank of England in London.
Photographer: Jason Alden/BloombergThis article is for subscribers only.
The Bank of England is reducing the cash buffer it holds against unexpected losses as it unwinds its quantitative easing bond-buying program, in a move UK officials said would provide taxpayers better “value for money.”
Governor Andrew Bailey and Chancellor of Exchequer Rachel Reeves agreed the new arrangements in an exchange of letters that accompanied the latest projections for lifetime losses on the BOE’s asset-purchase facility. That’s the vehicle through which it originally bought £895 billion ($1.1 trillion) of bonds to boost growth and stave off deflation over the 2008 financial crisis and 2020 pandemic.