UK OFFICIAL HOLDINGS OF INTERNATIONAL RESERVES:

Part I: UK Government Foreign Currency Assets and Liabilities – October 2001

The UK Government’s net reserves fell by $257 million in October, bringing the end-October total to $13,670 (£9,401 million¹) compared with $13,927 (£9,475 million²) at the end of September.

	US $ million: market values
	end September 2001		end October 2001
Gross Reserves³	43,162		40,407
Liabilities	-29,236		-26,738
of which
foreign currency forwards and swaps (net)⁴	-16,486		-16,067
repo transactions⁵	-244		-193

Net reserves⁶	13,927		13,670

Change in net reserves		-257
of which
valuation effects		-253
transactions against sterling		-4
of which
UK public sector customers		-228
Other		224

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.

Revisions to previously published figures

3. The break down of the previously published change in the UK Government’s foreign currency net reserves figures for August and September 2001 have been revised. These revisions are detailed below. The headline figures for change in net reserves for August and September 2001 are not affected.

August 2001

	Published	Revised	Variance
Change in net reserves	479	479	-
of which
valuation effects	450	456	6
transactions against sterling	29	23	-6
of which
UK public sector customers	705	705	0
Other	-676	-682	-6

September 2001

	Published	Revised	Variance
Change in net reserves	279	279	-
of which
valuation effects	263	281	18
transactions against sterling	16	-2	-18
of which
UK public sector customers	-557	-557	0
Other	573	555	-18

Part II: Bank of England Foreign Currency Assets and Liabilities – October 2001

The Bank of England’s net holdings of foreign currency and gold fell by $4 million in October, bringing the end-October total to $90 million (£62 million¹) compared with $94 million (£64 million²) at the end of September.

	US $ million: market values
	end September 2001		end October 2001
Assets³	9,544		9,886

Liabilities	-9,450		-9,797
of which
foreign currency forwards and swaps (net)⁴	-800		-833
repo transactions⁵	-70		-

Net assets⁶	94		90

Change in net holdings		-4
of which
valuation effects		-8
transactions against sterling		4
of which
UK public sector customers		-
Other		4

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 banking 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 and Notes programme, and other capital items. Foreign exchange swaps may be 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.

1 When converted at the closing market rate (4pm) of £1 = $1.4541 on 31 October 2001.

2 When converted at the closing market rate (4pm) of £1 = $1.4699 on 28 September 2001.

3 In this presentation gross reserves exclude 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 at the link below.

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. For more information about National Statistics visit its website - link below.

Next publication date

5. The figures for October 2001 will be published on Monday 5 November 2001.

Enquiries

6. Media enquiries about this press release should be addressed to Simon Moyes in the Treasury Press Office on 020 7270 4420.

7. 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

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

Telephone: 020 7533 5888

minicom 01633 812399

Fax 01633 652747

Letters Room DG/18 1 Drummond Gate LONDON SW1V 2QQ

External links

Press Notices index 2001 June to December