Has #Sunak really lost Β£11bn in a 'debt blunder'?
This is complicated, but for once I'm going to side with the Treasury here... π€
Three key points:
1. The Treasury would have had to order the #BoE to force commercial banks to swap reserves for gilts - not a good look...
This is complicated, but for once I'm going to side with the Treasury here... π€
Three key points:
1. The Treasury would have had to order the #BoE to force commercial banks to swap reserves for gilts - not a good look...
2, The Treasury would have had to get the timing just right to save Β£11 billion, and done so while issuing huge amounts of new gilts without disrupting the market, or influencing interest rate expectations. Not realistic.
Indeed, this strategy could easily have lost money...
Indeed, this strategy could easily have lost money...
3. The 'insurance' proposed by @NIESRorg would also only have been temporary, because it would replace reserves with short-dated (1-2 year) gilts.
Looking further out, the average maturity of UK gov't debt is already relatively long - for which the DMO deserves more credit.
Looking further out, the average maturity of UK gov't debt is already relatively long - for which the DMO deserves more credit.
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