§ Lord Davies of OldhamMy right honourable friend the Chief Secretary to the Treasury has made the following Ministerial Statement.
Cash Ratio Deposits are non-interest bearing assets deposited with the Bank of England by banks and building societies. They are used by the bank to finance its unremunerated activities, in particular its sterling liquidity operations and its efforts to secure price stability and the stability of the financial system in general, from which these institutions are key beneficiaries. The Cash Ratio Deposit Scheme was placed on a statutory basis when the Bank of England Act became law in 1998. In February 2003, the Paymaster General announced by Written Statement a review of the operation of the statutory scheme in its first five years.
57WSIn a Written Statement of 18 September 2003 in the House of Commons (Official Report, col. 63WS), the Government set out the review's conclusions, one of which was that the minimum threshold for making deposits should be raised from £400 million to £500 million, freeing 18 institutions from the scheme and benefiting all remaining contributing institutions by reducing the level of their deposits by £150,000 each. This proposal would require a change to secondary legislation under the Bank of England Act 58WS 1998. HM Treasury has therefore consulted publicly about this change and invited views on the review's other recommendations.
The Government's response to this consultation exercise was published yesterday. Given the general support among respondents for the proposal set out above, the Government are today laying before Parliament a draft statutory instrument designed to increase the threshold for making deposits under the CRD scheme from £400 million to £500 million, scheduled to come into force on 1 June 2004.