Rather, as Izabella Kaminska tips us, Bank of freakin' England!
I was under the impression that bearer bonds were a thing of the past.
And yet, as I discovered this week, not only does the BoE issues foreign currency debt to finance its foreign currency reserves (that’s weird right?) it does so in the form of securities that can be held in bearer form. And it’s been doing so since 2006.
It’s not a huge amount of money – about $6 billion, so almost nothing in central bank terms — but it is curious.
For one thing, foreign exchange reserves are usually the result of operations that provide central banks with an FX position on the asset side of the balance sheet. Here you are the central bank picking up foreign exchange as part of your daily operations — which are usually held in the account of a bank within the monetary system (or at least with a subsidiary) of the foreign currency unit you are holding or in some cases directly with the foreign central bank — and you have two choices. You can keep holding the FX in a bank account or you can invest it in a money-like debt security. If you are feeling especially exotic, you might buy some private debt or equity.
Nevertheless, if you choose the second option you go to the market and acquire said securities. You don’t issue them yourself.
And either way the FX has been financed by the issuance of your own sterling liabilities. The FX exchange exposure/effect is something you probably desire, as in the case of the SNB.
But here we have the BoE (not the UK Treasury) issuing dollar securities to raise dollars for FX operations on the liability side, which expose the central bank to FX risk it can’t necessarily control without guaranteed access to Fed swap lines (which of course it does now have) in the event the dollar appreciates.*Psst, here's the most recent Bank of Sierra Leone info:
But to top things off, the notes have a bearer option....MORE
TREASURY BONDS AUCTION RESULT
RESULT OF THE TREASURY BONDS AUCTION HELD ON FRIDAY 11th SEPTEMBER, 2015
THE INTEREST RATE THAT CLEARED THE MARKET FOR THE TREASURY BONDS ISSUED ON FRIDAY SEPTEMBER 11, 2015 MATURING FRIDAY SEPTEMBER 9, 2016 WAS 5% PER ANNUM.
CUSTOMERS WHO BID AT INTEREST RATE OF 5% AND BELOW SUCCEEDED IN THE AUCTION AT A FLAT RATE OF 5%.