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The Bank of England and the Government Debt
Operations in the Gilt-Edged Market, 1928–1972


Part of Studies in Macroeconomic History

  • Author: William A. Allen, National Institute of Economic and Social Research (NIESR), London
  • Date Published: January 2019
  • availability: In stock
  • format: Hardback
  • isbn: 9781108499835

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About the Authors
  • The Bank of England and the Government Debt recounts the surprising history of the Bank of England's activities in the government securities market in the mid-twentieth century. The Bank's governor, Montagu Norman, had a decisive influence on government debt management policy until he retired in 1944, and established an auxiliary market in government securities outside the Stock Exchange during the Second World War. From the early 1950s, the Bank, concerned about inadequate market liquidity, became an increasingly active market-maker in government securities, rescuing the commercial market-makers in the Stock Exchange several times. The Bank's market-making activities often conflicted with its monetary policy objectives, and in 1971, it curtailed them substantially, while avoiding the damaging effects on liquidity in the government securities market that it had feared. Drawing heavily on archival research, William A. Allen sheds light on little-known aspects of central banking and monetary policy.

    • Reveals largely unknown facts about the Bank of England's gilt-edged operations during the mid-twentieth century through the use of archival research
    • Offers a different interpretation of monetary history by focusing on the problems posed by inadequate market liquidity
    • Sheds light on the Bank of England's secretive policy decisions and the general public's understanding of those decisions
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    Reviews & endorsements

    'This is the fascinating story of how the Bank of England deployed its huge powers in the gilt-edged market for nearly half a century. If you want to know why Parliamentary scrutiny of the Bank of England matters today, this book provides some instructive history. If you want to know what was really going on in monetary policy and government debt management before, during and after the war, it is an essential read.' Andrew Tyrie, former Chair of the Parliamentary Commission on Banking Standards and of the Treasury Select Committee

    'Based on personal experience as a senior Bank of England official, and research into primary Bank archival sources, William A. Allen provides the definitive account of how the UK Gilts Market developed over the years 1928–1972. Essential reading for anyone interested in that market.' Charles Goodhart, Professor Emeritus of Banking and Finance, Financial Markets Group, London School of Economics

    'The size of the public debt is often discussed, but the mechanics of how it is issued and managed have been quite obscure despite the importance for financial markets and interest rate policy. Allen draws on archive records to tell a compelling and detailed story of how the Bank of England manipulated the market over almost fifty years. On the way he offers an important insight into the Bank of England's relationship with the market and with the Treasury in the decades before monetarism. Must reading for those seeking to understand the British economy and financial markets from the 1920s to the 1970s.' Catherine Schenk, University of Oxford

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    Product details

    • Date Published: January 2019
    • format: Hardback
    • isbn: 9781108499835
    • length: 274 pages
    • dimensions: 235 x 157 x 19 mm
    • weight: 0.52kg
    • contains: 23 b/w illus. 27 tables
    • availability: In stock
  • Table of Contents

    1. Introduction
    2. Price and quantity discovery, market making and liquidity in the gilt market
    3. Government securities and the structure of the Stock Exchange
    4. Government debt management before 1928
    5. The gilt market and the Issue Department 1928–39
    6. Government debt management and the gilt market in the Second World War
    7. Post-War:
    8. The gilt market from the reactivation of monetary policy until 1960
    9. Gilt market liquidity in the 1960s
    10. The high tide of intervention:
    11. The conflict with monetary policy recognised and addressed:
    12. Competition and credit control, 1970–72
    13. The Bank of England's contribution to market liquidity
    14. Governance in practice
    15. Conclusions
    16. Epilogue: bearing the cost of providing liquidity.

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    The Bank of England and the Government Debt

    William A. Allen

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  • Author

    William A. Allen, National Institute of Economic and Social Research (NIESR), London
    William A. Allen is a Visitor at the National Institute of Economic and Social Research. He worked at the Bank of England from 1972 to 2004, serving as a senior official in the Gild-Edged Division from 1982 to 1986.

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