Our letter to HMT on its forthcoming review of the cash ratio deposit scheme


1. On 28 September, HMT wrote to the BSA and to eligible institutions outlining its intention to start the review. One of the issues the review will address is the impact of the scheme on participating institutions since 2007. We were asked to frame our comments in the context of:

  • the purpose of the scheme
  • the statutory nature of the scheme
  • the range of eligible liabilities and eligible institutions
  • the current level of CRDs.

2. In our response, we argued that the benefits of the Bank's unremunerated activities benefit far more than just building societies and banks. Insurers are one such group that currently do not participate in the scheme but clearly benefit from financial and monetary stability. Another point we pressed was the Bank's lack of accountability to the institutions required to provide it with finance. In the past, we had suggested the the entire CRD scheme be replaced by the seigniorage income from the issue of banknotes; we have repeated this point.

3. Click below to read our response:

Our response to HMT letter on review of CRD scheme