BoE reserves framework drawn into political arena
Minor party’s proposal to axe interest on reserves highlights BoE’s costly operating framework
The Bank of England’s (BoE) framework for controlling the short-term interest rate has become an issue in the UK general election, after one party proposed axing interest on reserves.
The Reform UK party included the policy in its manifesto, published on June 10, as a way of raising additional funds for the Treasury. The party claimed ceasing interest payments to banks could save £30 billion–40 billion ($38 billion–51 billion) per year.
The proposal is unlikely ever to be executed. Reform, led by
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