Bank of England losses: Positive Money response

Simon Youel, Head of Policy and Advocacy at Positive Money, said: 

“In continuing to sell assets at a loss while paying out huge amounts of interest to commercial banks, the Bank of England is not only out of step with other major central banks, it’s showing a deep disregard for public finances.

“That’s because these losses are paid for by the Treasury, taking tens of billions from the government’s budget which would be better spent on countless other things.

“If the Bank of England insists on making losses, it should follow best practice from other central banks, such as the Federal Reserve and European Central Bank, in marking losses as a ‘deferred asset’ until they can be recouped, so that the costs aren’t front-loaded onto the public.”

Notes:

• The BoE’s report can be found here: https://www.bankofengland.co.uk/asset-purchase-facility/2024/2024-q3 

• The New Economics Foundation found that quantitative tightening could cost the Treasury over £96 billion over the next four years: https://neweconomics.org/2024/09/bank-of-englands-quantitative-tightening-could-cost-treasury-over-96bn-over-next-four-years 

• Whilst she was chair of the Treasury Select Committee, Harriet Baldwin criticised the Bank of England for taking a ‘leap in the dark’ with its approach to  quantitative tightening: https://www.ft.com/content/d65ccaa7-e12b-4d9a-a132-11180d39f891