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Bank Of England

Volume 981: debated on Monday 24 March 1980

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asked the Chancellor of the Exchequer whether he will set out the money value of all the action which the Bank of England, on his advice, has taken in the last three months to relieve the pressure on the money markets and the banking system and prevent a further increase in interest rates.

[pursuant to his reply, 12 March 1980, c. 571]: The Bank of England as part of its day-to-day responsibilities for management of the money markets acts regularly to relieve shortages of liquidity in the discount market. For market management reasons details of such operations are not published, but as a result of seasonal tax payments and sales of public sector debt they have at times in the last three months been substantial, as on other occasions in the past.As well as these regular operations, the Bank with my authority, on 16 January released £950 million of special deposits equivalent to 2 per cent. of eligible liabilities and with effect from 15 February made available to the clearers a facility of £500 million for the sale and repurchase of gilt-edged stock. These were purely technical operations designed to ease exceptional pressure on the reserve asset position of the banking system.Action of that kind to relieve similar liquidity shortages in the money market has been undertaken during the early months of the year on several occasions in the past, including 1977 and 1979.