tailieunhanh - The Distributional Effects of Asset Purchases Bank of England, 12 July 2012

The Reserve Banks perform these services as f iscal agents for these enti- ties. Securities are safekept in the form of electronic records of securities held in custody accounts. Securities are transferred according to instruc- tions provided by parties with access to the system. Access to the Fed- wire Securities Service is limited to depository institutions that maintain accounts with a Reserve Bank, and a few other organizations, such as federal agencies, government-sponsored enterprises, and state govern- ment treasurer’s off ices (which are designated by the . Treasury to hold securities accounts). Other parties, specif ically brokers and dealers, typi- cally. | The Distributional Effects of Asset Purchases Bank of England 12 July 2012 Summary The MPC sets monetary policy for the economy as a whole in order to achieve the Government s inflation target. Changes in interest rates and asset purchases financed by issuing reserves QE unavoidably have distributional implications. Without the Bank s asset purchases most people in the United Kingdom would have been worse off. Economic growth would have been lower. Unemployment would have been higher. Many more companies would have gone out of business. This would have had a significant detrimental impact on savers and pensioners along with every other group in our society. All assessments of the effect of asset purchases must be seen in that light. The Bank s asset purchases have been almost entirely of gilts causing the price of gilts to rise and yields to fall. But this in turn has led to an increase in demand for other assets including corporate bonds and equities. As a result the Bank s asset purchases have increased the prices of a wide range of assets not just gilts. In fact the Bank s assessment is that asset purchases have pushed up the price of equities by at least as much as they have pushed up the price of gilts. The implications of QE for savers Changes in Bank Rate - not asset purchases - have been the dominant influence on the interest households receive on bank deposits and pay on bank loans. By pushing up a range of asset prices asset purchases have boosted the value of households financial wealth held outside pension funds but holdings are heavily skewed with the top 5 of households holding 40 of these assets. The implications of QE for pension funds and pensioners The pension income of those already in receipt of a pension before asset purchases began has not been affected by QE. Defined benefit pension schemes The retirement incomes of people coming up to retirement in a defined benefit pension scheme have not been affected by QE. 1 2 When assessing the impact .