Citation and commencement
1. This Order may be cited as the Cash Ratio Deposits (Value Bands and Ratios) Order 2018 and comes into force on 1st June 2018.
Interpretation
2. In this Order—
“the Act” means the Bank of England Act 1998;
“the Bank” means the Bank of England;
“call notice period” means the six-month period covered by a call notice issued by the Bank under paragraph 3 of Schedule 2 to the Act;
“gilt” means UK government sterling denominated bonds issued by or on behalf of the Treasury; and
“relevant date” means the thirteenth working day of the month immediately prior to the commencement of each call notice period.
Revocation of the 2013 Order
3. The Cash Ratio Deposits (Value Bands and Ratios) Order 2013(1) is revoked.
Value bands
4. The value bands specified for the purposes of paragraph 4 of Schedule 2 to the Act are—
(a)up to and including £600 million; and
(b)over £600 million.
Ratios
5.—(1) For the purposes of paragraph 4 of Schedule 2 to the Act, the ratio applicable to each value band shall be as follows.
(2) For the value band referred to in article 4(a), the ratio, expressed as a percentage, shall be 0%.
(3) For the value band referred to in article 4(b), the ratio, expressed as a percentage, for each call notice period is calculated by applying the following formula—
(4) For the purposes of the formula in paragraph (3)—
(a)“i” equals £169,000,000;
(b)“el” equals £2,837,817,500,000; and
(c)“py” represents the portfolio yield on the investments made by the Bank under the cash ratio deposit scheme and is calculated by applying the following formula—
where—
“a” is the arithmetic mean of the yield on 8-year gilts over the period of 13 years ending with the relevant date;
“b” equals—
for the first call notice period following the coming into force of this Order, the arithmetic mean of the yield on 8-year gilts over the period of six months ending with the thirteenth working day of the month prior to the commencement of that period; and
for each subsequent call notice period, the arithmetic mean of the yield on 8-year gilts over the period of six months ending with the thirteenth working day of the month prior to the commencement of the second call notice period following the coming into force of this Order; and
“c” is the arithmetic mean of the yield on 8-year gilts over the period of six months ending with the relevant date.
(5) The ratio referred to in paragraph (3) shall be rounded to three decimal places.
Review
6.—(1) The Treasury shall from time to time—
(a)carry out a review of this Order; and
(b)publish a report setting out the conclusions of the review.
(2) The first report shall be published before the end of the period of five years beginning with 1st June 2018.
(3) Subsequent reports shall be published at intervals not exceeding five years.
Andrew Stephenson
Rebecca Harris
Two of the Lords Commissioners of Her Majesty’s Treasury
24th May 2018