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Banks And Banking
26th March 2013
Laid before Parliament
27th March 2013
Coming into force
3rd June 2013
The Treasury, in exercise of the powers conferred by paragraph 8 of Schedule 2 to the Bank of England Act 1998(1), make this Order.
In accordance with paragraphs 10 and 11 of Schedule 2 to that Act, the Treasury have consulted the Bank of England, such persons as appear to them to be representative of persons likely to be materially affected by this Order and such other persons as they think fit, and in making this Order have regard to the financial needs of the Bank of England.
1. This Order may be cited as the Bank of England (Call Notice) (Benchmark Rate of Interest) Order 2013 and comes into force on 3rd June 2013.
2. For paragraph 7 of Schedule 2 to the Bank of England Act 1998, substitute—
7.—(1) The benchmark rate of interest for the purposes of paragraph 6(3) is the Bank rate.
(2) In this paragraph, “Bank rate” means—
(a)the official Bank rate determined by the Monetary Policy Committee of the Bank, or
(b)where an order under section 19 of this Act is in force, any equivalent rate determined by the Treasury under that section.”.
Two of the Lords Commissioners of Her Majesty’s Treasury
26th March 2013
(This note is not part of the Order)
Schedule 2 to the Bank of England Act 1998 (c. 11) makes provision concerning the maintenance by certain institutions of cash ratio deposits with the Bank of England (“the Bank”). The institutions covered by these arrangements are those defined as “deposit-takers” by section 17 of, and sub-paragraphs (1A) to (1C) of paragraph 1 of Schedule 2 to, that Act. The Bank is empowered by paragraph 3 of that Schedule to give such an institution a call notice specifying an amount it is expected to have on deposit with the Bank during a specified period. Under paragraph 6(3), the amount the Bank may require an institution to pay when eligible institutions are late in making deposits is an amount equal to interest for the period covered by the notice, at 4% over the benchmark rate.
This Order replaces paragraph 7 of Schedule 2 which currently specifies the benchmark rate for this purpose. This Order specifies that the Bank rate (as defined in new paragraph 7(2)) is the benchmark rate.
A full impact assessment of the effect that this Order will have on the costs of business and the voluntary sector is available from Her Majesty’s Treasury, 1 Horse Guards Road, London SW1A 2HQ or on www.hm-treasury.gov.uk and is published alongside the Order on www.legislation.gov.uk.
Explanatory Memorandum sets out a brief statement of the purpose of a Statutory Instrument and provides information about its policy objective and policy implications. They aim to make the Statutory Instrument accessible to readers who are not legally qualified and accompany any Statutory Instrument or Draft Statutory Instrument laid before Parliament from June 2004 onwards.
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