On 17 April 2018, there was published on the legislation.gov.uk website a draft of the Cash Ratio Deposits (Value Bands and Ratios) Order 2018 together with a draft explanatory memorandum. The Order amends the ration used for calculating the percentage of eligible liabilities that eligible financial institutions are requirements to deposit in a non-interest bearing account at the Bank of England (BoE) under the cash ratio deposit (CRD) scheme. The CRD scheme funds the BoE’s monetary policy and financial stability functions.
The Order amends the CRD scheme to provide that the ratio for institutions whose eligible liabilities are more than £600 million will be calculated every six months by applying the formula contained in the draft Order.
No amendments are made to:
- the ratio to be applied in respect of those eligible institutions that have eligible liabilities between £0 and £600 million. For this value band, the ratio remains at 0%; and
- the threshold value ban, which determines the minimum value of deposits that an institution must hold to be eligible for the CRD scheme. The threshold is any eligible liabilities above £600 million.