Overview

This bill aims to completely ban the Bank of England from undertaking quantitative easing (QE) and prevents the government from covering any losses incurred as a result of past QE activities. The bill defines QE through regulations to be set by the Chancellor of the Exchequer and approved by Parliament.

Description

The core of the bill is to amend the Bank of England Act 1998. A new clause (12A) will explicitly forbid the Bank of England from engaging in QE. Furthermore, it prevents the Chancellor of the Exchequer from using government funds to compensate the Bank of England for losses potentially stemming from past QE actions. The Chancellor must define "quantitative easing" through regulations which will be subject to parliamentary approval. These regulations must be presented to Parliament within two months of the bill's passing.

Government Spending

The bill is projected to impact government spending in a way that is not directly measurable in monetary terms. Preventing indemnification of future losses associated with QE would limit any potential future liabilities for the Treasury. The overall effect of the bill on UK government spending is indeterminate; while it aims to avoid future costs associated with QE, potential economic impacts are difficult to accurately quantify.

Groups Affected

This bill could affect several groups:

• The Bank of England: Severely restricts its monetary policy tools.
• The Treasury: Prevents the government from using taxpayer money to cover potential losses incurred by the Bank of England related to QE.
• Financial Markets: May experience volatility due to the uncertainty surrounding the elimination of QE as a monetary policy tool.
• The UK Economy: The overall economic impact of the prohibition on quantitative easing is uncertain and could potentially be significant, both positively and negatively, depending on various economic factors.

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