§ Mr. Gouldasked the Chancellor of the Exchequer (1) if the money passed back to the private sector by the Bank of England through the purchase of commercial bills appears in any calculation or measure of growth in the money supply; what are the figures for that measure in every quarter since the beginning of 1979; and how either that measure or the amount spent on purchasing commercial bills compares with the amount of overfunding for each quarter over the same period;
(2) what is the estimated total of commercial bills (a) currently held by the Bank of England and (b) still in private hands;
(3) what has been the extent of overfunding for each quarter since the beginning of 1979; what has been the extent of the Bank of England's purchase of commercial bills for each quarter over the same period; and what effect these two factors have had on interest rates and monetary policy.
§ Mr. Ian Stewart[pursuant to his replies, 26 February 1985, c. 148]: Purchases of commercial bills by the Bank of England are undertaken to offset factors which would otherwise cause a reduction in banker's balances at the Bank, a small component of MO. These transactions in commercial bills are between the Bank and the monetary sector, and therefore do not affect broad money. Banking month data for MO are given in the article on "Changes to monetary aggregates and the analysis of bank lending" in the March 1984 issue of the Bank of England Quarterly Bulletin.
Concerning figures for commercial bills and for overfunding I would refer the hon. Member to the answers I gave him on 16 November and 11 December 1984. Table 3.1 in the Bank of England Quarterly Bulletin provides further information on acceptances outstanding. The relationship between overfunding and money market 264W assistance is discussed in an article on "Funding the PSBR" published in the December 1984 issue of the Bank of England Quarterly Bulletin.
The Bank's money market operations are designed to prevent daily money market shortages from driving up short term interest rates to an inappropriate level. The level of funding over this period has helped reduce the rate of monetary growth.
§ Mr. Gouldasked the Chancellor of the Exchequer what rate of interest is currently charged by the Bank of England when it agrees to purchase commercial bills; and what information he has as to how this compares with the rates of interest currently payable on bank deposits.
§ Mr. Ian Stewart[pursuant to his reply, 26 February 1985, c. 148]: The Bank of England's dealing rates for commercial bills are published daily, as are the rates of interest available on bank deposits.
§ Mr. Gouldasked the Chancellor of the Exchequer if there is any policy limit on the ability of the Bank of England to purchase commercial bills.
§ Mr. Ian Stewart[pursuant to his reply, 26 February 1985, c. 148]: Policy is for the Bank of England to operate to relieve shortages in the money markets by purchase of commercial bills and other methods in a way consistent with control of the monetary aggregates.