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58/00 4 May 2000

UK OFFICIAL HOLDINGS OF INTERNATIONAL RESERVES

A further step in promoting the Government's agenda of openness, transparency and accountabilityis achieved today with the introduction of improvements to the monthly publication of information about UK official holdings of international reserves. The first publication in the amended format shows :

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

1. The UK Government's net reserves, fell by $41 million in April, bringing the end-April total to $13,643 million (£8,764 million⁽¹⁾) compared with $13,684 million (£8,589 million⁽²⁾) at the end of March.

		US $ million: market values
	end March 2000	Change	end April 2000
Gross Reserves(3)	35,738		37,154
Liabilities	-22,053		-23,510
of which
foreign currency forwards and swaps (net)(4)	-3027		-4,793
o/a repo transactions(5)	-1,382		-1,026
Net reserves(6)	13,684		13,643
Changes in net reserves		-41
of which
valuation effects		-67
transactions against sterling		25
of which
UK public sector customers		-198
other		224

2. As set out in the Chancellor's letter of 6 May 1997 to the Governor, 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 April.

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

1. The Bank of England's net holdings of foreign currency and gold fell $46 million in April, bringing the end-April total to $82 million (£53 million⁽⁷⁾) compared with $128 million (£80 million⁽⁸⁾) at the end of March.

			US $ million: market values
	end March 2000	Change	end April 2000
Assets(9)	9,156		9,293
Liabilities	-9,028		-9,211
of which
foreign currency forwards and swaps (net)(10)	12		23
o/a repo transactions	0		0
Net assets	128		82
Changes in net reserves		-46
of which
valuation effects		-47
transactions against sterling		1
of which
UK public sector customers		0
other		1

2. As set out in the Chancellor's letter of 6 May 1997 to the Governor, 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 intervention operations were undertaken in April.

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.

4. 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 participate in CHAPS euro, as part of the arrangements for TARGET.

5. 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 off-set 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 shown net in the table above, where they increase assets and liabilities by $490 million at the reporting date. The Bank's gross claim on other central banks is $24,782 million at the end of the month.

NOTES TO EDITORS

1. Improvements to the publication of information on UK foreign currency reserves was announced on Friday 28 April 2000 (Treasury press release 57/00).

2. The figures for May 2000 will be published on Monday 5 June 2000.

3. The UK's international reserves are now being published in accordance with 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".

4. The United Kingdom began to disclose additional information on its foreign currency assets and liabilities from July 1999: data for end-July 1999 onwards can be found on the Bank of England's web-site at www.bankofengland.co.uk/mfsd/reserves.

5. The Bank of England's web-site also provides information on the methodology now used and definitions of the main conventions employed.

FOOTNOTES

1. When converted at the closing market rate (5pm) of £1= $1.5567 on 28 April 2000

2. When converted at the closing market rate (5pm) of £1= $1.5932 on 31 March 2000

3. In this presentation gross reserves exclude market 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.

7. When converted at the closing market rate (5pm) of £1= $1.5567 on 28 April 2000

8. When converted at the closing market rate (5pm) of £1= $1.5932 on 31 March 2000

9. In this presentation gross reserves exclude market to market valuation of foreign currency forwards and swaps. These derivatives are shown (excl sterling leg) within liabilities.

10. Net present value of foreign currency forwards, interest rate and cross currency swaps (excl sterling leg).