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3 November 2000

UK OFFICIAL HOLDINGS OF INTERNATIONAL RESERVES:

Part I: UK Government Foreign Currency Assets and Liabilities - October 2000

1. The UK Government's net reserves fell by $291 million in October, bringing the end-October total to $13,259 million (£9,131 million1) compared with $13,550 million (£9,166 million2) at the end of September.

US $ Million Market Values
End Sept 2000 End Oct. 2000
Gross Reserves3 42,926 43,480
Liabilities -29,375 -30,221
of which
foreign currency forwards and -10,722 -11,177
swaps (net)4
repo transactions5 -625 -1,379
Net reserves6 13,550 13,259
Changes in Net Reserves -291
of which
valuation effects -272
transactions against sterling -19
of which
UK public sector customers 315
Other -334




2. As set out in the Chancellor's letter of 6 May 1997 to the Governor of the Bank of England, if the Government so instructs then the Bank, acting as its agent, may intervene in the foreign exchange market by buying or selling the government's foreign exchange reserves. If intervention is undertaken, the monthly press release will provide details of the amount and date of the intervention and an explanation of why it was undertaken. No intervention operations were undertaken in October.


Part II: Bank of England Foreign Currency Assets and Liabilities - October 2000

1. The Bank of England's net holdings of foreign currency and gold fell by $43 million in October, bringing the end-October total to $78 million (£54 million1) compared with $121 million (£82 million2) at the end of September.

US $ Million Market Values
End Sept 2000 End Oct. 2000
Assets3 8,504 7,862
Liabilities -8,383 -7,785
of which
foreign currency forwards and 3 20
swaps (net) 4
repo transactions5 0 0
Net assets6 121 78
Changes in net holdings -43
of which
valuation effects -43
transactions against sterling 0
of which
UK public sector customers -
Other -



2. As set out in the Chancellor's letter of 6 May 1997 to the Governor of the Bank of England, the Bank may also undertake foreign exchange operations to intervene in support of its monetary policy objective. If intervention is undertaken, the monthly press release will provide details of the amount and date of intervention and an explanation of why it was undertaken. No such intervention operations were undertaken by the Bank in October.

3. The Bank of England's foreign currency assets and liabilities arise from foreign currency and gold deposits placed with the Bank by overseas central banks and other customers, the net effect of foreign exchange swaps conducted in the course of the Bank's money market operations, UK participation in the TARGET system, the Bank's Euro Bill programme, and other capital items. The foreign exchange swaps are undertaken as a supplement to the Bank's usual money market techniques to provide sterling liquidity to the market, and are purely technical in nature. The proceeds of the Bank's Euro Bills are used to finance the provision by it of intra-day liquidity, on a secured basis, to participants in CHAPS euro, as part of the arrangements for TARGET.

4. The Bank's participation in the TARGET system gives rise to large and variable euro balances with other central banks operating the system. These are largely offset by similar balances that the other central banks hold at the Bank, and lead to small net liabilities to commercial banks participating in the system. The resulting assets and liabilities are reflected net in the table above, where they increased assets and liabilities by $66 million at the reporting date. The Bank's gross claim on other central banks was $19,756 million as at the end of October.

1. When converted at the closing market rate (5pm) of £1 = $1.4521 on 31 October 2000.
2. When converted at the closing market rate (5pm) of £1 = $1.4783 on 29 September 2000.
3. In this presentation gross reserves exclude marked to market valuation of foreign currency forwards and swaps. These derivatives are shown (excl sterling leg) within liabilities.
4. Net present value of foreign currency forwards, interest rate and cross currency swaps (excl sterling leg).
5. Market value of liabilities to repay foreign currency received in repo transactions.
6. Figures may not sum due to roundings.

Notes to Editors

Background

1. The UK's international reserves are now being published in accordance with the methodology developed by the International Monetary Fund in the context of revisions to their Special Data Dissemination Standard (SDDS), and the G10 central banks in their report ?Enhancing transparency regarding authorities? foreign currency liquidity position?.

2. The UK began to disclose additional information on its foreign currency assets and liabilities required under the International Monetary Fund's Special Data Dissemination Standard (assets, liabilities and derivatives) from July 1999. Data for end-July 1999 onwards can be found on the Bank of England's website.

External links

Methodology and definitions

3. The Bank of England's website also provides information on the methodology now used and definitions of the main conventions employed.

A National Statistics publication

4. National Statistics is the official source for authoritative, accurate and relevant information on the economy and society. It brings together a vast range of statistical information overseen by the National Statistician. The National Statistics logo is your assurance of statistics produced to the highest professional standards.

External links

Next publication date

6. The figures for November 2000 will be published on Tuesday 5 December 2000.

Enquiries

7. Media enquiries about this press release should be addressed to Charles Keseru in the Treasury Press Office on 020 7270 5188.


8. Public enquiries (non-media) about this press release should be addressed to the Treasury's Public Enquiry Unit on


Telephone: 020 7270 5188

Fax: 020 7270 4574

National Statistics Public Enquiry Service

9. For general enquiries about National Statistics, contact the National Statistics Public Enquiry Service on

Telephone: 020 7533 5888

minicom: 01633 812399

Fax: 01633 652747

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