Gold and Foreign Exchange Reserves
The question
To ask the Chancellor of the Exchequer, what steps she takes to assess the resilience of the UK's international reserves to potential (a) geopolitical and (b) macroeconomic shocks.
Answered by Emma Reynolds
The Exchange Equalisation Account (EEA) holds the UK government’s official reserves. HM Treasury appoints the Bank of England as its agent to carry out the day-to-day management of the reserves. The reserves are managed to ensure that the policy objectives, set out in the EEA Act 1979, can be met at all times. These objectives are:
- Checking undue fluctuations in the exchange value of sterling;
- Enabling government payments abroad; and
- Carrying out the UK’s obligations to the IMF
A total of £72 billion of additional financing was provided for the reserves between 2008-09 and 2019-20. The size of the UK's reserves stands broadly in line with other comparable economies. HM Treasury manages the liquidity, credit and market risk of the reserves to ensure that they meet the policy objectives of the EEA.
Verbatim has judged this answer against the question that was actually asked — answered, partly answered, or evaded. Sign in to see the verdict →