Summary

Decision from ONS’s Economic Statistics Classification Committee on the statistical classification of the Bank of England Term Funding Scheme (part of the Asset Purchase Facility).

Publications

• Economic statistics classification article: statistical treatment of the Bank of England’s Term Funding Scheme in the UK national accounts and public sector finances

  ONS has classified the Bank of England’s Term Funding Scheme (TFS) in accordance with international rules set out in the European System of Accounts 2010 (ESA 2010) and accompanying statistical manuals. ONS has concluded that its economic statistics will reflect the TFS in the public sector balance sheet through both a loan asset for the TFS lending to banks and building societies, and a deposit liability relating to the creation of central bank reserves. However, as the classification decision also dictates that the loan assets are to be recorded as illiquid assets, the impact of the TFS on the Public Sector Net Debt will be to increase it by the value of the central bank reserves created to fund the TFS lending (all else being equal). The Bank of England has indicated that the value of lending in the TFS could reach £100 billion. This paper describes how the TFS, which became operational in September 2016, works and based on this how ONS has decided that the scheme transactions and stock are to be classified in the National Accounts and related economic statistics. The classification review also took into account previous decisions on similar schemes, such as the Funding for Lending Scheme (FLS) and the Special Liquidity Scheme (SLS), and contrasts the classification decisions for these different schemes.

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