Wednesday, 11 March 2009

Bank of England balance sheet starts to calm down

Last year, the Bank of England was the fastest growing commercial bank in the UK. After the Lehman crisis, it had in effect become the UK interbank market; taking deposits from commercial banks and then onlending these funds back to the commercial banks.

More recently, the BoE's balance sheet has started to shrink. The demand for cash from commercial banks has started to decline, leading to a fall in commercial bank reserve balances held at the central bank.

However, I am waiting to see what happens when the bank starts what it misleadingly calls quantitative easing. All this new money will appear on the BoE's balance sheet. So from now on, I will be taking a regular look at the BoE's weekly publication of its balance sheet.

2 comments:

Anonymous said...

Seen the QE petition?

Geoff said...

the bank of england balance sheet is about to explode.