Bank Reserves
(asked on 14th September 2026) - View Source
Question to the HM Treasury:
To ask His Majesty's Government what consideration they have given to paying interest on a proportion of reserve deposits made with the Bank of England by commercial banks and providing for any reduction in reserves to be paid out of the interest on that proportion, rather than the current arrangements in which interest is paid on the whole deposit and provided to the Bank by HM Treasury from public funds.
Bank Rate is the reference rate that commercial banks both receive on their reserve holdings and must pay to borrow additional reserves from the Bank of England. Remuneration of reserves at Bank Rate plays a role in the implementation of monetary policy and ensures commercial banks pass on changes in interest rates to household and businesses.
Data on payments to and from HM Treasury to the Asset Purchase Facility (APF) is made publicly available by the Office for National Statistics (ONS) in its monthly Public Sector Finances publication. The data is available in worksheet PSA9B.
Time period | Interest receivable (£ million) | Interest payable (£ million) | Net interest receivable (£ million) | Cash transfers to HM Treasury total (£ million) | Cash transfers from HM Treasury total (£ million) |
Dataset identifier code | MDD6 | MDD7 | MDD8 | MT6A | MF7A |
2021-22 | 17,990 | 1,859 | 16,131 | 7,218 | 0 |
2022-23 | 17,003 | 20,567 | -3,564 | 4,164 | 5,010 |
2023-24 | 15,403 | 39,748 | -24,345 | 0 | 44,549 |
2024-25 | 13,753 | 34,045 | -20,291 | 0 | 36,323 |
2025-26 | 11,802 | 23,596 | -11,793 | 0 | 16,660 |
These data refer to reserves backed only by bonds held in the Asset Purchase Facility (APF). A range of financial institutions hold reserve deposit accounts at the Bank of England and data on reserves held by commercial banks specifically is not publicly available. But the Bank of England does publish the aggregate level of outstanding reserves and the Bank Rate. As of 23 September 2026, total outstanding central bank sterling reserves were £642,336m.
The Monetary Policy Committee at the Bank of England are responsible for the conduct of monetary policy, and the separation of fiscal and monetary policy is essential to its effective delivery.
The UK’s approach of indemnifying the APF is in line with best practice as set out in a 2023 IMF working paper, relating to several areas of governance, accountability, and transparency. Other central banks do share both past Quantitative Easing-related profits and future losses with their national treasuries but do so, and account for doing so, in a variety of ways and over different time periods.