Bank of England Governor Bailey saidabugarcia6500c3catfishspecialAs the central bank reduces reserves to well below current levels, markets should be prepared for a significant increase in securities repurchase operations.
The Bank of England is in a ten-year periodabugarcia6500c3catfishspecialThe cumulative amount during the quantitative easing period of 2000 was as high as £ 895 billion (1abugarcia6500c3catfishspecialUS$.1 trillion) assets, which are currently being reduced at a rate of approximately £ 100 billion a year.
Bailey said a reserve size of £ 345 billion to £ 490 billion is "a good starting point" for investors.
"Looking ahead, we expect a significant increase in repo operations and the market should continue to be prepared for this," Bailey said in a speech released by the Bank of England on Tuesday.
He said the Bank of England would keep some British government bonds on its balance sheet.