Balance sheet reduction policy and SONIA: Difference between pages

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(Create page. Source: The Treasurer, Cash Management Edition April 2019, p15.)
 
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''Monetary policy.''
''Interest rate benchmarks''.


In relation to monetary policy, balance sheet reduction is the opposite process from quantitative easing.
Sterling Overnight Index Average.


Balance sheet reduction involves a central bank reducing its holdings of financial assets, and its effect is to decrease the money supply.


The reduction can be achieved by allowing existing holdings to mature ('roll off') without replacing them.
Tracks actual average market sterling funding rates each day:
*for settlement that day
*where repayment is made on the following business day.  




The financial assets concerned are usually central government debt.
It is published by WMBA Ltd (part of the European Venues and Intermediaries Association - EVIA) in London at 5pm each day.  




Balance sheet reduction is also sometimes known as 'quantitative tightening'.
It is defined and calculated as the weighted average rate (to four decimal places) of all unsecured sterling overnight cash transactions brokered in London by EVIA member firms between midnight and 4.15pm London time with all counterparties in a minimum deal size of £25 million.
 
 
The Bank of England assumed responsibility as the administrator of a revised SONIA with effect from April 2018.
 
Among other changes, SONIA was broadened to include overnight unsecured transactions negotiated bilaterally, as well as those arranged via brokers.




== See also ==
== See also ==
* [[Asset Purchase Facility]]
* [[Benchmark]]
* [[Cash in the new post-crisis world]]
* [[Euro Overnight Index Average ]]
* [[Central bank]]
* [[EURONIA]]
* [[Fiscal policy]]
* [[European Venues and Intermediaries Association]]
* [[Helicopter money]]
* [[Financial Stability Board]]
* [[Monetary policy]]
* [[LIBOR]]
* [[Money supply]]
* [[Over night index average rate]]
* [[Quantitative easing]]
* [[Overnight indexed swap]]
* [[POMO]]
* [[RFR WG]]
* [[Risk-free rates]]
* [[SARON]]
* [[Sterling overnight index average]]
* [[TONAR]]
* [[The Working Group on Sterling Risk-Free Reference Rates]]
 
 
===Other links===
 
[[Media:Slaughter and May interest rate benchmarks.pdf| 2021: A Benchmark Odyssey, Practical Guidance for Treasurers on interest rate benchmarks, Slaughter and May]]
 
[[Media:The_Treasurer_-_LIBOR_-_Goodbye_to_all_that.pdf| LIBOR: Goodbye to all that, The Treasurer]]
 
[http://www.bankofengland.co.uk/markets/benchmarks Bank of England: SONIA and other benchmarks]


[[Category:The_business_context]]
[https://www.evia.org.uk/ European Venues and Intermediaries Association - EVIA]

Revision as of 15:01, 9 July 2018

Interest rate benchmarks.

Sterling Overnight Index Average.


Tracks actual average market sterling funding rates each day:

  • for settlement that day
  • where repayment is made on the following business day.


It is published by WMBA Ltd (part of the European Venues and Intermediaries Association - EVIA) in London at 5pm each day.


It is defined and calculated as the weighted average rate (to four decimal places) of all unsecured sterling overnight cash transactions brokered in London by EVIA member firms between midnight and 4.15pm London time with all counterparties in a minimum deal size of £25 million.


The Bank of England assumed responsibility as the administrator of a revised SONIA with effect from April 2018.

Among other changes, SONIA was broadened to include overnight unsecured transactions negotiated bilaterally, as well as those arranged via brokers.


See also


Other links

2021: A Benchmark Odyssey, Practical Guidance for Treasurers on interest rate benchmarks, Slaughter and May

LIBOR: Goodbye to all that, The Treasurer

Bank of England: SONIA and other benchmarks

European Venues and Intermediaries Association - EVIA