Review of the cash ratio deposit scheme: consultation on proposed changes
The government is consulting on the way banks and building societies contribute to funding the Bank of England’s monetary policy and financial stability functions.
The Cash Ratio Deposit (CRD) scheme funds the Bank of England’s monetary policy and financial stability functions. Under the scheme, banks and building societies with eligible liabilities of more than £600 million are required to place a proportion of their deposit base with the Bank on a non-interest bearing basis. The Bank then invests these funds in interest bearing assets (i.e. gilts) and the income generated is used to meet the costs of its monetary policy and financial stability functions.
The CRD scheme was placed on a statutory footing by the Bank of England Act 1998. The government has since committed to review the scheme every five years. The Chief Secretary to the Treasury made a written ministerial statement on 18 December 2017 announcing the start of the 2018 review.
The government will publish a formal response following the consultation.