Foreign Trade

The Foreign Exchange Joint Standing Committee (FX JSC) was established in 1973 under the auspices of the Bank of England, in the main part as a forum for banks and brokers to discuss broad market issues and the focus of the Committee's regular work remains issues of common concern to the different participants in the foreign exchange market. The Bank of England provides the Committee's Chairman and Secretary: they can be contacted on 020 7601 5982.One of the main responsibilities of the Committee is to maintain the Non-Investment Products Code. This is a voluntary code of good market practice which covers bullion, wholesale deposits as well as the FX market. It is maintained in conjunction with the Sterling Money Markets Liaison Group, the London Bullion Market Assosciation, and certain trade associations.The Committee includes senior staff from many of the major banks operating in the foreign exchange market in London, as well as from voice- and electronic-brokers, corporate users of the foreign exchange market, the Financial Services Authority (FSA) and representatives from the British Bankers' Association, the Association of Corporate Treasurers and the Wholesale Market Brokers' Association.The Bank of England's framework for its operations in the sterling money markets is designed to implement the Monetary Policy Committee (MPC)'s interest rate decisions while meeting the liquidity needs, and so contributing to the stability of, the banking system as a whole.The Bank of England is the sole issuer of sterling central bank money, the final, risk-free settlement asset in the United Kingdom. This enables the Bank to implement monetary policy and makes the framework for the Bank's monetary operations central to liquidity management in the banking system as a whole and by individual banks and building societies.The Bank's market operations have two Objectives, stemming from its monetary policy and financial stability responsibilities as the United Kingdom's central bank. They are:(i) To implement monetary policy by maintaining overnight market interest rates in line with Bank Rate, so that there is a flat risk-free money market yield curve to the next MPC decision date, and there is very little day-to-day or intraday volatility in market interest rates at maturities out to that horizon.(ii) To reduce the cost of of disruption to the liquidity and payment services supplied by commercial banks. The Bank does this by balancing the provision of liquidity insurance against the costs of creating incentives for banks to take greater risks, and subject to the need to avoid taking risk onto its balance sheet. The framework has four main elements:Reserves-averaging scheme. Eligible UK banks and building societies undertake to hold target balances (reserves) at the Bank on average over maintenance periods running from one MPC decision date until the next. If an average balance is within a range around the target, the balance is remunerated at Bank Rate. Operational Standing Facilities. Operational standing deposit and (collateralised) lending facilities are available to eligible UK banks and building societies. They may be used on demand. In normal circumstances, the lending / deposit rates are 25bp higher than Bank Rate and 25bp below Bank Rate respectively. A Discount Window Facility. This is a facility to provide liquidity insurance to the banking system. Eligible banks and building societies may borrow gilts, for up to 30 days, against a wide range of collateral in return for a fee, which will vary with the collateral used and the total size of borrowings. OMOs. Open market operations (OMOs) are used to provide to the banking system the amount of central bank money needed to enable reserve-scheme members, in aggregate, to achieve their reserves targets. OMOs comprise short-term repos at Bank Rate, long-term repos at market rates determined in variable-rate tenders and outright purchases of high-quality bonds.