The Bank of England today announces that it will be replacing the Bank Return publication with a new Weekly Report.
The Bank Return provides a weekly snapshot of the Bank’s balance sheet, identifying key components such as reserves balances and notes in circulation, as well as the total size of the Bank’s balance sheet. It provides transparency about the Bank’s financial operations and supports the Bank’s objective of being open and accountable about its activities.
However, the Bank Return can also act as a vehicle for disclosing the existence of liquidity support operations. The provision of liquidity support to illiquid but solvent banks is a core function of the Bank and experience suggests that it is more effective for such operations to remain covert at the time, so as not to further undermine confidence in the institution receiving support.
The financial crisis that began in 2007 highlighted the risk of inadvertent disclosure of support operations via the Bank Return. In response, the Government removed the legal requirement that the Bank had been under to publish the weekly Bank Return through the Banking Act (2009). In addition, the Plenderleith Review recommended that the Bank consider ceasing to publish the Bank Return in order to improve its ability to provide covert Emergency Liquidity Assistance (ELA).
The changes announced today address the disclosure risk which exists in the Bank Return while retaining transparency about the Bank’s regular operations. A new Weekly Report will be introduced that will include additional detail across some parts of the Bank’s balance sheet but omit data relating to bilateral operations. This will allow the Bank to carry out such operations but report them with a delay, whilst moving towards a more modernised approach to reporting in relation to its regular operations.
In designing the new Weekly Report, the Bank has sought to identify a format that will be helpful and relevant for users of these data. Overall, it will typically disclose over 90% of the Bank’s balance sheet by value. The information it provides will be augmented on a quarterly basis, with a lag of five quarters, with data for other assets and liabilities, completing the balance sheet.
The final Bank Return will be published on 25 September, with the first Weekly Report being published a week later.
The Bank is pre-announcing the change in this way to dispel any speculation that this alteration to reporting arrangements is tied to the provision of liquidity to a specific counterparty. This is not the case.
Further details about the Bank Return and the changes being made to it can be found in an explanatory article released today on the Bank’s website. A separate article, setting out in detail the changes to the Bank’s statistical reporting, will be published in Bankstats today at 09:30 hrs (BST).