Question to the HM Treasury:

To ask the Chancellor of the Exchequer, what estimate he has made of the amount of public funds that commercial banks will receive as a result of expected interest rate increases in the next 12 months; and what assessment he has made of the impact of that on his policies.

The Bank transmits Bank Rate to the economy in part through the remuneration and supply of central bank reserves. Much of these reserves have funded asset purchases made by the Asset Purchase Facility (APF), which is a Bank of England facility, principally used as the vehicle for Quantitative Easing, which is a monetary policy tool used by the independent Monetary Policy Committee.

The reserves created to implement this tool pay Bank Rate to institutions holding these reserves, particularly commercial banks. HM Treasury agreed to indemnify the Asset Purchase Facility against any profits or losses when it was set up in 2009.