On 7 June 2022, HM Treasury published a Policy Statement following its earlier consultation on the review of the cash ratio deposit scheme. Our earlier blog on the consultation can be found here.
In the Policy Statement HM Treasury describes its policy for replacing the current cash ratio deposit scheme with the Bank of England (BoE) levy, a new levy for funding the BoE’s policy functions. Key points in the Policy Statement include:
- The new levy the levy will cover the costs of the BoE’s monetary policy and financial stability functions.
- In line with the cash deposit scheme, the eligible institutions will broadly be UK deposit-taking institutions authorised under the Financial Services and Markets Act 2000.
- The BoE will determine the total policy levy annually to match budgeted expenditure on policy functions. Each year the BoE will notify eligible institutions of the amount of the levy that they are liable to pay and the time and method by which the levy must be paid. In the event of an eligible institution’s failure to pay the levy, the outstanding amount will be recoverable as a debt due to the BoE.
- When the new levy scheme is introduced, the BoE will publish a standalone framework document outlining the BoE’s approach to levying policy costs.
- The UK Government intends to legislate when Parliamentary time allows. Following the Royal Assent of primary legislation, HM Treasury will take forward steps for secondary legislation.