We all know that QE is not making any difference to the economy. How do we know? Well if the government prints an extra £175 billion of money and GDP still manages to fall by £5.6 billion, it should be fairly obvious that the £175 billion has had no effect.
It isn't to difficult to see why it has no effect. Part of the programme, announced in August was supposed to lend to non-investment grade companies by buying specially issued commercial paper. The purchases would be made against companies’ expected cash receipts from trade receivables, equipment leases and short-term credits to consumers, including credit card loans.
The Bank of England issued its quarterly report on Monday, saying that this particular may have got off to a slow start because borrowers need to create special vehicles to issue commercial paper, which the Bank would then buy.
The Bank also says that market conditions had improved in recent months, possibly reducing demand from companies for ready cash. On the other hand any business you talk to will tell yu that the banks are closed for lending business. Part of the problem is that the BoE will only buy paper issued by vehicles backed by financial assets with no more than nine months to maturity.
So if you think the government will guarantee the credit of small companies read here and weep.
Asset Purchase Facility
This page contains links to the results of individual operations for gilts and corporate bonds, as well as to longer-run time series for each of the APF schemes and facilities.
The table below show the outstanding stock holdings (on a settled basis, net of any redemptions) for each facility. These data are as at close Thursday 22 October 2009.
|Secured Commercial Paper|
A time series showing a running total of the quantity of assets purchased by the creation of central bank reserves is available in the Interactive Database(updated weekly on Fridays).
Credit guarantee scheme
No operations have been conducted as yet.