Gold and Foreign Exchange Reserves
The question
To ask the Chancellor of the Exchequer, what stress tests his department applies to the Exchange Equalisation Account in respect of movements in (a) the US dollar, (b) the euro, (c) the yen, (d) interest rates and (e) the gold price.
Answered by Treasury
The Government does not comment on market movements. The UK’s official reserves are held in the Exchange Equalisation Account (EEA) and managed to ensure that the policy objectives set out in the EEA Act 1979 can be met at all times.
HM Treasury and the Bank of England agree the EEA’s strategic asset allocation annually. In doing so, the liquidity, credit and market risk of the reserves is managed in line with the EEA’s investment principles: readiness, risk tolerance and, subject to these, optimising risk-adjusted return. Reserve composition decisions reflect these principles.
Information on the size and composition of the reserves is published monthly.
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