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The Bank's money market framework

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The Bank of England implements the policy stance of the Monetary Policy Committee through its operations in the sterling money markets. It also uses these operations to reduce the costs of disruption to the liquidity and payment services supplied by banks. In order to ensure their continued effectiveness, it was necessary to adapt the framework for these operations in response to the significant changes to financial and monetary conditions that occurred during the recent financial crisis. This article describes how central banks can use their money market operations to implement monetary policy and provide liquidity support to banks and some of the issues that can arise when undertaking operations to achieve these two objectives. The article goes on to explain the Bank’s choices about its own operating framework, including how its thinking has been influenced by the lessons learned during the financial crisis.

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  • Clews, Roger & Salmon, Chris & Weeken, Olaf, 2010. "The Bank's money market framework," Bank of England Quarterly Bulletin, Bank of England, vol. 50(4), pages 292-301.
  • Handle: RePEc:boe:qbullt:0033
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    File URL: https://www.bankofengland.co.uk/-/media/boe/files/quarterly-bulletin/2010/the-banks-money-market-framework.pdf?la=en&hash=68D89173901BA87C26DB8B639A4ECACF3348CE70
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    References listed on IDEAS

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    1. Cross, Michael & Fisher, Paul & Weeken, Olaf, 2010. "The Bank's balance sheet during the crisis," Bank of England Quarterly Bulletin, Bank of England, vol. 50(1), pages 34-42.
    2. Todd Keister & Antoine Martin & James J. McAndrews, 2008. "Divorcing money from monetary policy," Economic Policy Review, Federal Reserve Bank of New York, issue Sep, pages 41-56.
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    Cited by:

    1. Renne, Jean-Paul, 2016. "A tractable interest rate model with explicit monetary policy rates," European Journal of Operational Research, Elsevier, vol. 251(3), pages 873-887.
    2. Jackson, Christopher & Noss, Joseph, 2015. "A heterogeneous agent model for assessing the effects of capital regulation on the interbank money market under a corridor system," Bank of England working papers 548, Bank of England.
    3. McLeay, Michael & Radia, Amar & Thomas, Ryland, 2014. "Money creation in the modern economy," Bank of England Quarterly Bulletin, Bank of England, vol. 54(1), pages 14-27.
    4. Jurgilas, Marius & Zikes, Filip, 2012. "Implicit intraday interest rate in the UK unsecured overnight money market," Bank of England working papers 447, Bank of England.
    5. Claudio Borio & Anna Zabai, 2016. "Unconventional monetary policies: a re-appraisal," BIS Working Papers 570, Bank for International Settlements.
    6. repec:eee:jfinin:v:23:y:2014:i:2:p:232-254 is not listed on IDEAS
    7. Garreth Rule, 2015. "Understanding the central bank balance sheet," Handbooks, Centre for Central Banking Studies, Bank of England, edition 1, number 32.
    8. Windram, Richard & Footman, John, 2010. "The history of the Quarterly Bulletin," Bank of England Quarterly Bulletin, Bank of England, vol. 50(4), pages 258-266.

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